KKR-Backed Virescent Renewable Energy Trust Raises Rs 650 Cr via Domestic Bond Issue

Virescent Renewable Energy Trust (VRET), an infrastructure investment trust (InvIT), has raised Rs 650 crore through a domestic bond issuance across 7.33-year (Rs 150 crore) and 10-year (Rs 500 crore) tranches.

February 07, 2022. By Manu Tayal

Virescent Renewable Energy Trust (VRET), an infrastructure investment trust (InvIT), has raised Rs 650 crore through a domestic bond issuance across 7.33-year (Rs 150 crore) and 10-year (Rs 500 crore) tranches.

This transaction marked the largest single series issuance of Rs 500 crore in a 10-year tenor by a renewable energy company.

This bond issuance establishes a new yield curve for VRET, while also achieving significant elongation of average tenor as compared to the earlier Rs 1,000 crore bond issuance of VRET in November 2021 (4.8 years to 9.4 years).

The average quarterly coupon of the bonds is 7.93 per cent, fully fixed for the entire tenor.

VRET will primarily use the bond proceeds to fund its immediate acquisition-related debt requirements as it scales up its portfolio from the existing 450 MW (peak) of operational solar projects.

The bonds have been assigned the highest domestic rating of AAA (Stable) by CRISIL and India Ratings.

Commenting on the development, Sanjay Grewal, CEO, Virescent Infrastructure, said “This bond issuance is a significant achievement in VRET’s journey, demonstrating our debt raising capabilities to achieve competitive pricing and longer maturity profiles. 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.”

VRET’s bond issuance comes in the backdrop of the announcement in the recent Union Budget to issue Sovereign Green Bonds, thereby continuing the Govt. of India’s serious push to promote renewables. Proceeds from Green Bonds are earmarked only for green projects, the company said.

With this new initiative by Govt. of India, more renewable energy companies are expected to issue Green Bonds in the domestic market at competitive pricing, it added.

Grewal mentioned that “It is very encouraging to see specialized lenders and development finance institutions such as IIFCL and Aseem Infrastructure participate in the long-term debt markets as it will go a long way in creating much needed capital for infrastructure funding.”

He added that “We are pleased to have a diversified lender base comprising of Banks, Mutual Funds, NBFCs, Specialized Financial Institutions & Corporate Treasuries, etc through our current & earlier bond issuances.”

“Keeping in mind country’s infrastructure needs and development of bond markets, IIFCL has embraced these objectives by investing into Infrastructure Bonds thereby boosting the availability of longer-tenor bond finance. This step will propel the new financial architecture wherein financial institutions and banks fund the construction phase and later re-financings are funded through bond market and IIFCL is accelerating this proposition,” said Padmanabhan Raja Jaishankar, Managing Director, IIFCL.

Virender Pankaj, CEO, Aseem Infrastructure Finance Ltd, commented “this issuance marks our first fixed investment in a significantly longer tenor (10 years) Infrastructure Bond and is in line with our aspiration to become one of the leading players in Infrastructure financing by providing focused and customized solutions to clients.”
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