KKR in advanced talks to invest $400m in Hero Future Energies [Private Equity Insights]

Leading US private equity manager KKR is in advanced negotiations to invest around $400 million in Hero Group’s renewables energy company Hero Future Energies (HFE).

The deal could be the firm’s single largest cheque in the Indian clean and renewable energy space so far, according to a report by business daily The Economic Times.

The final rounds of negotiations are going on before a formal announcement, which is expected in a few weeks, according to the report. The investment will largely be a primary infusion to lower the debt and grow the business. JP Morgan is advisor on the transaction.

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The investment is for a significant minority stake but comes with major governance rights that would make KKR a co-promoter along with founder chairman and managing director Rahul Munjal. Munjal is the nephew of Pawan Kant Munjal, chairman and chief executive officer of Hero MotoCorp, added the report.

HFE operates in wind, grid-connected solar, rooftop sectors and energy storage and has a portfolio of 1.5 GW of operating assets and another 1.5 GW under construction.

The company has a pipeline of 500 MW of large-scale, grid-connected solar projects in Europe, Africa and South Asia. It aims to have a capacity of 5 GW by 2024. In 2021, HFE had sold a 49 percent stake in two of its projects totalling 500 MW to O2 Power, according to its website.

Last year, KKR raised a record $3.9 billion maiden Asia Pacific Infrastructure Fund. It followed up this year with a $17 billion Global Infrastructure Fund, exceeding the initial $12 billion target.

KKR Infrastructure Fund’s first India transaction was a co-investment in May 2019 with Singapore’s GIC in Indigrid, an operator of 11 electricity transmission assets, where it invested $148 million. In April 2020, it also acquired five operational solar energy assets from Shapoorji Pallonji Infrastructure Capital.

Source: Money Control

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