New Delhi-based infrastructure investment trust India Grid Trust (IndiGrid) has announced the acquisition of Virescent Renewable Energy Trust (VRET) at an enterprise value of up to Rs 4,000 crore in a cash consideration deal. The share purchase agreement was signed on Friday, according to a BSE filing.
India Grid Trust will acquire 100% of the units in VRET from the unitholders of VRET, in one or more tranches, as per the unit purchase agreement executed on May 12, 2023. The acquisition is subject to all other closing adjustments as specified in the definitive documents entered into.
“The Enterprise Value is not exceeding Rs 40 billion (for cash consideration),” the filing added.
This acquisition will help India Grid Trust in expanding its renewable energy portfolio, as VRET owns wind and solar assets across several states in India, with a combined capacity of 1,000 MW.
India Grid Trust, which was listed in 2017, is sponsored by KKR and Sterlite Power Transmission. It is the first power sector Infrastructure Investment Trust in India. The trust focuses on owning, operating, and maintaining power transmission assets in India.
India Grid Trust has been looking to expand its portfolio and recently raised funds through an institutional placement of units. The trust had raised Rs 1,500 crore in January 2023 and Rs 1,000 crore in March 2023 through this route.
With this acquisition, IndiGrid will further strengthen its position in the renewable energy sector. The acquisition of VRET is expected to provide IndiGrid with stable and predictable cash flows and is in line with the trust’s strategy of acquiring high-quality transmission and renewable energy assets.
The renewable energy sector in India is growing rapidly, and the government is taking several initiatives to promote renewable energy. India has set a target of achieving 175 GW of renewable energy capacity by 2022. This includes 100 GW of solar, 60 GW of wind, 10 GW of biomass, and 5 GW of small hydro capacity.
India Grid Trust’s acquisition of VRET is a significant move towards achieving this target. The trust has been playing a crucial role in the development of the power sector in India and has been focusing on creating a stable and predictable income stream for its investors.
The acquisition of VRET will not only help IndiGrid in expanding its renewable energy portfolio but will also provide an opportunity to contribute to India’s sustainable energy transition.
According to the company, this acquisition is expected to be highly accretive to IndiGrid’s unitholders, with VRET adding 12 solar projects and 4 wind projects to IndiGrid’s portfolio. The acquisition will also add 1,380 MW of renewable power to IndiGrid’s overall installed capacity, bringing it up to 4,530 MW. The assets being acquired are located across eight Indian states, and are expected to generate an annual revenue of around Rs 800 crore.
Harsh Shah, Chief Executive Officer of IndiGrid, expressed his pleasure over this acquisition, saying that it is an important step towards achieving IndiGrid’s goal of creating a diversified portfolio of high-quality power transmission and renewable energy assets. He also stated that the acquisition will help IndiGrid achieve its objective of providing stable and predictable returns to its unitholders.
IndiGrid is a leading infrastructure investment trust in India, established to own and operate power transmission assets. It was formed in 2016 by Sterlite Power Grid Ventures Limited, a leading developer of power transmission infrastructure in India. IndiGrid’s portfolio includes 13 power transmission projects, with a total network of 38 power transmission lines and 11 substations spanning over 7,570 circuit kilometres across 17 Indian states. With this acquisition, IndiGrid will also enter the renewable energy sector, which is a rapidly growing segment in India’s power sector.
The acquisition is subject to regulatory approvals and other customary closing conditions. IndiGrid expects to close the transaction by the end of the current financial year. Once the acquisition is completed, VRET will become a wholly-owned subsidiary of IndiGrid.
