Power sector’s first InvIT buys 3 more projects

IndiGrid, the first infrastructure investment trust (InvIT) in the power sector, has acquired three more projects of its sponsor, Sterlite Power Grid Ventures, for ~1,490 crore.

These acquisitions result in a 40 per cent increase in assets under management to ~5,300 crore, said the company. The three assets consist of five transmission lines, aggregating 1,425 circuit km, thereby increasing the total portfolio of IndiGrid to 13 transmission lines and two substations, across eight states.

IndiGrid was floated with two assets of Sterlite – Jabalpur Transmission Company and Bhopal Dhule Transmission Company. It has now acquired RAPP Transmission Company, Purulia & Kharagpur Transmission Company and Maheshwaram Transmission. The firm said annualised distribution would increase by four per cent, from ~11 to ~11.44 per unit and the implied yield would increase to 12.1 per cent from 11.6 per cent.

“The acquisition is to be funded entirely by debt at IndiGrid or the SPV (special purpose vehicle) level and debt to be secured against cash flows of the underlying assets. There is possibility of issuing non-convertible debentures (subject to Sebi notification) on issuance of debt security at the InvIT level before the transaction closure timeline. Alternatively, IndiGrid will evaluate a mix of NCDs and bank loan,” the company said in an investor presentation.

Pratik Agarwal, chief executive, said, “Our aim is to have assets worth ~30,000 crore in the next five years. We will offer three more projects in another one and a half years. The Indian market has the potential of $50-60 billion to be invested in InvITs and REITs (real estate investment trusts).”

IndiGrid was launched in June and saw muted opening. “The slightly below par opening has nothing to do with the interest of the investor. Global investors were highly interested. It’s the retail (small investor) and HNIs (wealthy ones) who will take time to welcome models like InvITs. My guess is another six months,” said Agarwal.

While the pipeline of its operational and soon to be operational projects are enough for the next five years, the lack of projects on offer by the government could be a challenge. “The growth prospects are quite healthy, given our current set of projects. Government projects have slowed down but it’s actually the states that need to step up. The national grid is robust and it is time the states need to strengthen transmission network,” he said.