InvIT IndiGrid to make first third-party acquisition for Rs 2 billion

To also acquire three assets from Sterlite Power

In a first for the country, Infrastructure investment trust (InvIT) IndiGrid on Tuesday said it will acquire a partial stake in Patran Transmission for Rs 2.32 billion, making it the first third-party acquisition by an InvIT. In addition, IndiGrid has also acquired three assets from its sponsor Sterlite Power Grid Ventures for Rs 14.10 billion.

“IndiGrid has completed the acquisition of three assets — RAPP Transmission Company Limited, Purulia and Kharagpur Transmission Company Limited and Maheshwaram Transmission Limited (MRP) from its Sponsor — Sterlite Power Grid Ventures Limited,” IndiGrid said in its statement on Tuesday. The purchase consideration for the three assets is Rs 14.10 billion.

The three assets include five transmission lines aggregating 1,425 km, awarded on the perpetual basis on a Build, Own, Operate and Maintain model through competitive bidding. The residual contractual life is about 34 years and these inter-state assets operate under the Point of Connection mechanism.

In addition, the company said, “It has simultaneously signed definitive agreements with Techno Electric & Engineering Company Limited to invest in Patran Transmission Company Limited.” The transaction is valued at Rs 2.32 billion. “It is a structured transaction the idea is to take 100 per cent economic interest in Patran through a combination of debt and equity, but because of a lock-in clauses, the actual transaction looks like 46 per cent, but the intent is to have full interest,” said Pratik Agarwal, chief executive officer, IndiGrid.

Patran comprises of a 400/220 kV, 1000 MVA substation in Patran, Punjab with 14 bays and Loop-In-Loop-Out lines connecting the 400 kV Kaithal — Patiala line. This, the company said, is an inter-state transmission project was awarded to Techno Electric & Engineering Company Limited on a perpetual basis under Build, Own, Operate and Maintain model through tariff based competitive bidding mechanism. It has a long residual contractual life of about 33 years and is operating under the Point of Connection mechanism.

With the latest acquisitions, the present AUM for the InvIT stands at Rs 53 billion for six projects. “The InvIT aims to achieve Rs 300 billion as AUM in the next four years time primarily through the acquisition of the remaining the seven assets of the sponsor and third party assets from the market,” Agarwal added.

Sterlite Power, in turn, plans to use proceeds from the transaction to fund its future growth, with a visible order pipeline of $3 billion to $4 billion. Of the Rs 14.10 billion, Sterlite Power is expected to retire debt in the range of Rs 7-8 billion and use the remaining proceeds as equity for future projects. IndiGrid, in turn, will raise debt worth Rs14.10 billion to fund the acquisition.