US-based Global Infrastructure Partners (GIP) is exploring an infrastructure investment trust (InvIT) for its Indian green energy platform, Vector Green Energy, to raise around $100 million in equity, two people aware of the development said.
InvITs are trusts that manage income-generating infrastructure assets typically offering investors a regular yield and a liquid method of investing in infrastructure projects.
Renewable energy InvIT plans have been gaining traction in the backdrop of India’s galloping electricity demand. These include InvITs from KKR-backed Virescent Infrastructure and Tata Power’s renewable energy InvIT in which Malaysia’s state-run oil and gas company, Petroliam Nasional Bhd, or Petronas is looking to invest.
“GIP is exploring an InvIT process for Vector Green,” one of the two people cited above said, requesting anonymity.
GIP is an infrastructure-focused global private equity player and has 800 megawatts (MW) of wind and solar energy assets portfolio under its green energy platform, Vector Green Energy, a substantive part of which it had acquired from IDFC Alternatives in 2018. Vector Green had also acquired 306MW solar projects from RattanIndia Group in September last year.
Mint reported on 9 July last year about GIP planning to sell Vector Green Energy.
Queries emailed to a GIP spokesperson on late Wednesday night remained unanswered till press time.
GIP has been present in the Indian clean energy space and led a group of investors to acquire Equis Energy for $5 billion in October 2017. The sale included liabilities of $1.3 billion and the Indian portfolio of the Singapore-based renewable energy developer, comprising green energy platforms Energon and Energon Soleq.
This potential transaction comes at a time when India’s solar power tariffs have touched a record low of ₹1.99 per unit, and are expected to decline further. Also, this low tariff resulted in tariff-shopping with Gujarat Urja Vikas Nigam Ltd cancelling the Letters of Award for 700MW of solar power generation given to firms including GIP’s Vena Energy.
Despite these attempts, including the one by Andhra Pradesh government to renegotiate clean energy tariffs, and the financial crunch faced by the electricity distribution companies that got exacerbated by the pandemic, several deals are in play.
