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India Grid Trust (IndiGrid), a power infrastructure investment trust (InvIT), has entered into an agreement to acquire NER-II Transmission Ltd (NER-II) from Sterlite Power for ₹4,625 crore. The deal, which is the country’s single largest asset deal in power transmission, would boost IndiGrid’s assets under management by 34 per cent to more than ₹20,000 crore ($2.8 billion).
Post completion, the platform’s asset portfolio will consist of 13 power transmission projects, with a total network of 38 power transmission lines and 11 substations extending over 7,570-circuit km and 3,350 MVA in 17 States and 1 Union Territory, the company said in a statement.
The deal is part of the Framework Agreement IndiGrid had signed in April 2019 with Sterlite Power for acquisition of NER-II upon commissioning and is expected to close during fourth quarter of FY21.
NER-II is a part of Inter State Transmission Scheme network, and was awarded on a Build, Own, Operate, Maintain (BOOM) basis with a contractual period of 35 years.
Operating assets
“NER-II fits well with our strategy of focusing on operating assets with long-term cash flows and minimal counter party risk. This acquisition would be distribution per unit (DPU) accretive and augment our recent increase of DPU to INR 12.40 per annum for a considerable period. With a robust acquisition pipeline and support from our sponsors, IndiGrid is well positioned to execute its plans for providing stable and growing DPU, while maintaining a robust balance sheet,” Harsh Shah, Chief Executive Officer of IndiGrid said.
The project has 11 elements including two substations of 1,260 MVA capacity and four transmission lines extending to more than 830 circuit km. The assets span across Assam, Arunachal Pradesh and Tripura and is of strategic importance for the delivery of power in one of the toughest regions in the country. This project will strengthen the power transmission network in the North Eastern States and address the of transmission, sub-transmission, and distribution system needs of the region, it added.
The acquisition will be funded through a combination of internal accruals, debt, equity proceeds from the preference issue completed in May 2019 and its forthcoming rights issue.
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