Virescent Renewable Raises Rs 650 crore Through Domestic Bond Issue

Virescent Renewable Energy Trust (VRET) and Infrastructure Investment trust (InvIT) has raised a capital of Rs. 650 crore through a domestic bond issue. The issue is meant for two tenors – one is 7.33-year for Rs 150 crore and the other being a 10-year one for Rs 500 crore. Virescent is backed by global investment fund, KKR, which is its key sponsor.

Virescent’s press statement says that this transaction marks the largest single series issuance of Rs 500 crore in a 10-year tenor by a renewable energy company. The average quarterly coupon of the bonds is 7.93%, fully fixed for the entire tenor.

The trust has held that it will primarily use the bond proceeds to fund its immediate related debt requirements as it scales up its portfolio from the existing 450MW operational solar projects. The debt is confined to acquisition processes. Virescent Renewable Energy Trust was floated as an infrastructure investment trust (InvIT) by the parent company Virescent Infrastructure in 2021.

Sanjay Grewal, CEO, Virescent Infrastructure, said, “With VRET being a recently established entity in September 2021 and only 5 months into our journey, we are pleased to have issued such long tenor bonds and attracted marquee institutional lenders such as the government backed India Infrastructure Finance Company Limited as well as the NIIF promoted Aseem Infrastructure Finance Limited.”

Top rating agencies, Crisil and India Ratings, have assigned the highest rating of AAA which describes the issue as stable. During her Union Budget speech in Lok Sabha, India’s Finance Minister Nirmala Sitharaman had announced that the government proposes to issue sovereign green bonds to mobilise resources for green and renewables’ infrastructure.

Cheaper financing has been a key saviour of the renewable sector as costs have risen in 2021. It has allowed investors to settle for lower yet steady returns, even as the interest rate cycle starts to turn again. That could mean a significant pressure on firms by 2023, when the reversal in interest rates will play out significantly, leaving well funded firms with a major advantage, yet again.