KKR to invest in Hero Group’s renewable energy arm

Hero Future Energies (HFE), the renewable energy arm of the Hero Group, on Tuesday said it has signed an agreement with global investment major KKR to invest $450 million (roughly ₹3,500 crore) in the clean energy company.

HFE is an independent power producer (IPP) in India with a diversified portfolio of 1.6 gigawatts (GW) of operating solar and wind projects.

“KKR and HFE announced the signing of definitive agreements under which KKR and the Hero Group will invest $450 million in the Company. This investment will position HFE for continued growth and support its efforts to expand its renewable energy capacity and capabilities across technologies such as solar, wind, battery storage, and green hydrogen, and into new markets over time.,” HFE said in a statement.

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Through its range of solutions, HFE will also look to support companies in their efforts to decarbonize and transition towards sustainable energy sources to achieve their net zero emission goals, it added.

Investment round

Beyond supporting HFE’s growth, the Hero Group arm said adding this round of $450 million investment led by KKR will help accelerate India’s energy transition.

“It advances the country’s significant effort to expand renewable energy capacity, reduce carbon emissions by 1 billion tons by 2030 and achieve net zero emissions by 2070, as energy demand continues to grow alongside economic development. Private sector participation, including from global investors, is expected to be a key enabler for India to meet these targets, in lockstep with supportive government policies,” it added.

HFE Global CEO Srivatsan Iyer said, “KKR’s investment will drive HFE’s growth in the rapidly growing renewable energy markets domestically and globally, as well as in new technologies such as battery storage, solar-wind hybrid projects, round-the-clock power, and green hydrogen, among others.”

This partnership is also a validation of HFE’s core strengths and capabilities in design and engineering, development, and project execution, while achieving excellence in health, safety and environment standards, he noted.

Expanding RE across geographies

HFE Chairman & Managing Director Rahul Munjal said, “I am happy to welcome KKR as a strategic partner in our company to achieve our goal of expanding renewable energy capacity across multiple geographies by 2025. With this investment, HFE will work to accelerate India’s energy transition and contribute to the Indian government’s target of generating half the country’s power from non-fossil fuel sources by 2030.”

Hardik Shah, a partner at KKR, said that HFE’s clean energy solutions play an important role in helping companies decarbonize as energy demands continue to grow.

“We look forward to working closely with HFE’s management team and existing investors, including the Hero Group and IFC, to help HFE achieve its next phase of growth and contribute to the energy transition efforts in India and globally,” he added.

IFC’s Asia Pacific Regional Head of Infrastructure Isabel Chatterton said, “IFC is pleased to welcome KKR as a strategic partner on our longstanding investment in HFE. This investment will enhance the company’s growth plans both in India and globally, meeting surging energy demands and mitigating against climate impacts with reliable and affordable clean energy solutions.”

KKR investment is to be made from its Asia Pacific Infrastructure Fund. Since 2011, KKR has deployed over $15 billion in equity globally to invest in renewable assets, such as solar and wind, which have an operational power generation capacity of 23 GW, as of December 31, 2021. In 2020, KKR set up Virescent Infrastructure, a renewable energy platform to own and operate renewable assets in India.

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