Power Grid Corporation of India has fixed the price band for the upcoming initial public offering of its Infrastructure Investment Trust (InvIT) at ₹ 99-100.
This will be the first InvIT launch by a State-owned company as the Central Government tests a new path for monetisation of income-generating assets. The InvIT is issuing units aggregating up to ₹4,993.48 crore, and Power Grid is additionally offering units aggregating up to ₹2,741.5 crore through offer for sale route. The offering will open on April 29 and close on May 3.
Usage of funds
“We expect about ₹7,735 crore from the proceeds. These will be mainly deployed for the ongoing projects and the future capital expansion program of the company,” Powergrid CMD K Sreekant told
The proceeds will be primarily used to alleviate Power Grid’s debt. While it will not go directly to the Central Government, future dividends will be enhanced, Sreekant added.
“Some part of our internal accruals are currently deployed for capital expenditure. To the extent we are able to raise funds from this, the use of internal resources for capital expenditure will reduce. Therefore, there will be a greater pool available for dividend distribution,” he said.
Power Grid has initially offered 74 per cent stake in each of the five operational projects that have been hived-off into the InvIT. The balance 26 per cent will be transferred to the InvIT after the lock-in period under their transmission service agreements comes to an end.
Transfer of assets to InvIT
Power Grid’s large portfolio of assets won under tariff-based competitive bidding will foster the growth of the InvIT, Sreekant said. The firm has an asset pipeline of ₹22,500 crore, of which two projects worth ₹5,000 crore are operational while eleven projects are under construction. “Power Grid will transfer these assets to the InvIT progressively over the next six to seven years as these projects are commissioned and their lock-in periods come to an end,” he added.
IDBI Trusteeship Services is the trustee of the InvIT, while Powergrid Unchahar Transmission is the investment manager.