Companies

IndiGrid InvIT looking to buy four transmission assets for ₹7,000 crore

Venkatesh Ganesh Mumbai | Updated on January 27, 2020

Assets will be located across West Bengal, Bihar, Assam, Haryana and Madhya Pradesh, says CEO Harsh Shah

IndiGrid Infrastructure Investment Trust (InvIT) is looking to buy four transmission assets worth₹7,000 crore by 2021.

These assets will be located across West Bengal, Bihar, Assam, Haryana and Madhya Pradesh, CEO Harsh Shah told BusinessLine. They would include framework agreement assets, where the agreements are between two parties that have not come to a final agreement on their relationship but have enough details to move forward, with some details to be agreed upon in the future.

IndiGrid InvIT is backed by Sterlite Power Grid Ventures, which is majority owned by KKR and was established in 2016 to hold inter-State power transmission assets in India. It currently has ₹11,056 crore worth of assets under management (AUM).

Transmission sector changeover

The transmission sector in India is in the process of undergoing a changeover with increased power demand driving more capacity additions to meet this demand. In line with this, in 2018, the Centre had envisaged the construction of transmission projects for 66.5 GW of renewable energy (RE) generation capacities. The main intention was to ensure adequate transmission evacuation for RE capacities to help support the grid.

As a part of this plan, transmission projects worth ₹48,000 crore, and additional works worth ₹32,000-35,000 crore, were to be commissioned by December 2021.

Need for investments

“The transmission sector lags behind (generation) and requires substantial investments as the grid modernises by using a combination of thermal and renewables at scale,” said Rupesh Sankhe, Vice-President, Elara Capital.

This quantum of investment required is partially met by infrastructure financing approaches such as InvITs. This is especially needed for sectors such as power, which are considered to be stable investment avenues for retail investors.

Guidelines for InvITs, REITS

To give investors confidence, SEBI recently enabled rights issue for InvITs and REITs (real estate investment trusts) with new guidelines which stated that the issuer will have to disclose the objects of the issue, related-party transactions, valuation, financial details, review of credit rating and grievance redress mechanism in the placement document (similar to an IPO disclosure).

“We believe that this will be a great impetus to all stakeholders. These guidelines will enable all investors of InvITs and REITs to participate in future capital raises in a transparent manner. This will also enable direct retail participation in operational infrastructure assets and develop a new asset class offering a stable yield,” stated IndiGrid InvIT’s Shah.

The company owns eight operating projects consisting of 18 transmission lines with more than 4,900 circuit km length and four substations with 7,735 MVA transformation capacity.

Revenue more than doubles

For the quarter ended December 2019, IndiGrid reported consolidated revenues of ₹339.8 crore, up almost 100 per cent when compared to the ₹171 crore it posted in the year-ago period. Consolidated EBITDA for the quarter was ₹313.9 crore, up 102 per cent YoY.

Further, the company’s board approved the distribution of ₹3 per unit for Q3 FY20 entirely payable as interest to unit holders. Shah also said that IndiGrid is on track to achieve its stated distribution guidance of ₹12 per unit for FY20. So far, it has paid out ₹9 per unit. Including this 11th distribution, IndiGrid has distributed ₹30.56 per unit since listing.

Published on January 27, 2020

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