GIP’s Indian Arm Vector Green Gets CRISIL AAA Rating for Solar Portfolio

Vector Green Energy, the Indian renewables platform wholly owned by fund manager Global Infrastructure Partners (“GIP”) in India, has been awarded the highest rating of ‘AAA/stable’  by credit rating agency CRISIL for a group of its solar power generating plants (Restricted group). A AAA rating implies the highest safety and lowest credit risk for any financial instrument and firm.

This rating is for the Rs 1,237 crore non-recourse financing of the Restricted Group consisting of 356 MWp of operating solar power projects located across the country in the states of Rajasthan, Karnataka, MP, Maharashtra and UP. In addition to the locational diversity, the most significant attribute of this portfolio is that 98% of the capacity is contracted with SECI and NTPC, the two key central agencies, through 25 year fixed-tariff power purchase agreements. The rating reflects strong revenue visibility and counterparty profile, co-obligor structure of SPVs providing diversity benefit, healthy financial risk profile, credible management and strong parentage. A large part of the portfolio shd be the portfolio acquired from Rattan India by Vector Green in 2019.

These projects have been operational for over 3 years with the portfolio now managed by a team of Vector Green Energy professionals. The company claims that several performance improvement initiatives last year under GIP’s oversight have already yielding results in terms of improved generation in FY21 despite the impact of Covid.

Vector Green Energy currently operates wind and solar power generation projects aggregating 652 MW located across 19 projects and 12 states in India and continues to look to expand its portfolio through incremental acquisitions. Vector Green Energy has also been selectively participating in green-field project bids in the recent months. All the projects owned by Vector Green Energy are rated ‘A’ or above by diverse credit rating agencies without any external credit enhancements, which is quite distinct among the various renewable portfolios in the country.

Global Infrastructure Partners is one of the world’s largest infrastructure focused investor that manages over US $ 71 Bn (Rs 5.3 lakh crores) of assets including over 15GW of renewable projects.

The rating also reflects the strong influence of financially strong investors in the renewables sector, as they acquire existing assets to create bundled portfolios whose earnings stream can be monetised to raise debt.

Interestingly, solar asset sales continue apace, even as developers build out new projects, with acquisitions led by financial investors. Assets with PPA’s involving the central agencies, notably NTPC and SECI, continue to command better valuations.