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IndiGrid Infrastrucutre Investment Trust (InvIT) Board has approved the acquisition of East North Interconnection Company Limited (ENICL) for ₹1,020 crore.
This acquisition would increase the Assets Under Management (AUM) of IndiGrid by 10 per cent to ₹12,100 crore, the company said in a filing to the exchanges.
IndiGrid InvIT is backed by Sterlite Power Grid Ventures, which is majority owned by KKR and was established in 2016 to own inter-State power transmission assets in India. An InvIT is a trust that operates in a sector and distributes the income generated from the assets in the form of dividends to the fund unitholders.
Harsh Shah, Chief Executive Officer of IndiGrid, said: “Our strategy is to focus on accretive acquisitions to provide superior total returns to investors. In line with that, we propose to acquire ENICL which would result in accretion for unitholders."
As IndiGrid is leveraged at 45 per cent net debt /AUM, it will be able to acquire ENICL without any dilution.
On January 28, BusinessLine had reported that IndiGrid InvIT looks to buy transmission assets worth ₹7,000 crore.
This acquisition will be funded by internal accruals, proceeds from the preference issue done in May 2019 and new debt, company officials said. The acquisition is expected to be consummated during Q4 FY 20, subject to unitholders’ approval, execution of definitive agreements and regulatory approvals. After this acquisition, IndiGrid’s net debt/AUM will continue to be below 49 per cent.
ENICL consists of two 400 KV transmission lines with a total 900 circuit kilometers across Assam, Bihar and West Bengal. It is a strategic asset which is crucial for power exchange across north-eastern and eastern regions.
Post this acquisition, IndiGrid’s portfolio will increase to nine power transmission projects with a total network of 20 power transmission lines that span around 5,800 circuit kilometres across 13 States.
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