- With these two deals, IndiGrid will have acquired assets to the tune of almost ₹2,100 crore amid the lockdown
- Diversification into solar power is also expected to be substantially yield accretive for IndiGrid investors
India Grid Trust (IndiGrid), backed by private equity firm KKR, is acquiring a transmission asset from Sterlite Power for ₹1,050 crore, said IndiGrid chief executive officer Harsh Shah.
IndiGrid is one of India’s two listed infrastructure investment trusts (InvIT).
An InvIT is a pool of money collected from investors to manage operational infrastructure projects, in return for a regular yield to its unitholders.
“Last month, we closed the acquisition of East North Interconnection Co. Ltd for ₹1,020 crore and now we are acquiring Gurgaon Palwal Transmission Ltd (GPTL) for ₹1,050 crore,” Shah said in an interview.
The acquisition requires investor approval and the company will issue the e-voting notice on 9 April, he said. With these two deals, IndiGrid will have acquired assets worth almost ₹2,100 crore amid the lockdown, Shah said.
IndiGrid, which began its journey in 2017 as a vehicle to hold power transmission assets, now aims to diversify into renewables.
“Till now, we have been only a transmission company. Now, we aims to explore solar power projects. Within solar power, we aims to acquire projects with strong counterparties such as SECI and NTPC and projects with strong operational track record,” said Shah.
“We believe that this has a lot of synergy with the IndiGrid business model. Our focus has been to acquire stable operating projects which do not have price risks, which do not have material volume risk and which have long term contracts. There are also huge synergies on the operating and regulatory sides,” he said.
The diversification into solar power is also expected to be substantially yield-accretive for IndiGrid investors, said Shah.
However, IndiGrid will continue to remain primarily a transmission company, with solar power projects not contributing to more than 20-25% of its assets under management (AUM).
With the latest acquisition of Gurgaon Palwal Transmission, IndiGrid’s AUM will reach ₹13,000 crore.
IndiGrid’s balance sheet can allow it to acquire further assets to increase its AUM up to ₹20,000 crore without the need for more equity infusion, said Shah.
“We have about ₹5,300 crore of equity invested in IndiGrid. Considering that we will maintain 30/70 equity to debt ratio, we can acquire assets worth ₹19,000- 20,000 crore,” he said. IndiGrid had in May 2019 raised ₹2,560 crore from KKR, Singapore’s state investor GIC, and others.