Virescent assigned provisional ‘AAA’ rating for its renewable energy InvIT

US investor KKR-backed Virescent Infrastructure has announced that its proposed renewable energy infrastructure investment trust (InvIT) has received CRISIL’s ‘AAA/Stable’ provisional rating for its bank loan facilities.

The InvIT, Virescent Renewable Energy Trust (VRET), is awaiting final approval from the market regulator Securities and Exchange Board of India (SEBI).

VRET is the first renewable energy InvIT in India to be assigned the highest provisional rating of ‘AAA’ from CRISIL. 

The key rating drivers are Virescent’s healthy revenue visibility due to long-term power purchase agreements at pre-determined tariffs. Its track record of enhanced generation capabilities, healthy financial risk profile, and low leverage expectation also worked in its favor. 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 aggregate capacity of approximately 400 MWp. The assets are located in 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. Solar assets are estimated to comprise about 80% to 90% of its portfolio.

Sanjay Grewal, chief executive officer of Virescent, said, “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. The ‘AAA’ rating is reflective of the strong sponsorship of VRET by KKR, in addition to our prudent business strategy centered on building a diversified portfolio of approximately 1.5 GW over the next two to three years.” 

Grewal added that InvITs worth Rs 2 trillion are expected to enter the market over the next five years, and INR 80,000 crore of InvITs are in the pipeline for launch within a year. “The proposed InvIT of Virescent Infrastructure gives us a first-mover advantage to create new long-term and stable investment opportunities in India’s fast-growing renewable energy market.”