NEW DELHI: has assigned a provisional ‘AAA/Stable’ rating for the bank loan facilities of Virescent Renewable Energy Trust (VRET). The ‘AAA/Stable’ rating is the highest provisional rating that CRISIL assigns.
“VRET, the InvIT proposed to be launched by KKR-backed Indian renewable energy platform Virescent Infrastructure, has received a ‘AAA/Stable’ provisional rating for its bank loan facilities from CRISIL, an S&P company,” a Virescent Infrastructure statement said.
The proposed Virescent Infra
(InvIT) is awaiting final approval from the Securities and Exchange Board of India.
VRET is the first renewable energy InvIT in India to have been assigned a provisional AAA rating from CRISIL, and among the few domestic infrastructure companies which have been assigned an AAA rating, it said.
The AAA rating reflects Virescent’s healthy revenue visibility due to long-term power purchase agreements at pre-determined tariffs, in addition to its track record of enhanced generation capabilities, healthy financial risk profile, and its expectation of low leverage, it added.
Virescent’s low leverage has resulted in a healthy debt service coverage ratio over its entire debt tenure, supported by adequate liquidity.
VRET’s initial portfolio will comprise nine solar energy projects, with an aggregated capacity of approximately 400 MWp.
The assets are located in (and service) Maharashtra, Tamil Nadu, Uttar Pradesh, Gujarat and Rajasthan.
VRET aims to achieve approximately 1.5 GW of assets in the initial phase of its growth over the next two to three years.
The portfolio will continue to be largely focused on solar energy assets – with solar assets estimated to comprise approximately 80 per cent to 90 per cent of VRET’s portfolio — and that are diversified in terms of location and participating counterparties.
This follows announcements made in Union Budget 2021-22 that has plans to enact legislation to allow debt financing of InvITs by foreign portfolio investors (FPIs), in addition to various key initiatives. The provision demonstrates the government’s continued commitment to InvITs and REITs.
“The provisional ‘AAA’ CRISIL rating for Virescent’s proposed InvIT opens up a variety of options for us to raise debt financing at competitive rates from various market avenues – including FPIs – to enhance our liquidity position,” Sanjay Grewal, CEO of Virescent, said.
“The ‘AAA’ rating is reflective of the strong sponsorship of VRET by KKR, in addition to our prudent business strategy centred on building a diversified portfolio of approximately 1.5 GW over the next two to three years,” he added.
Grewal said InvITs worth Rs 2 lakh crore are expected to enter the market over the next five years, and Rs 80,000 crore of InvITs are in the pipeline for launch within a year.
The proposed InvIT of Virescent Infrastructure gives the company a first-mover advantage to create new long-term and stable investment opportunities in India’s fast-growing renewable energy market, the statement said.
Headquartered in Mumbai, Virescent will expand its diversified portfolio of operational renewable energy assets by identifying investment opportunities that have stable cash flows stemming from long-term contracts with state and central government counterparties across India.