IndiGrid, India’s first infrastructure investment trust for power assets, said it has acquired three transmission assets from its sponsor at a cost of 1,410 cr, taking the total assets under management to 5,300 cr.
The company said it will also invest Rs 232 cr into Patran Transmission Company Limited, a unit of Techno Electric & Engineering Company Limited. It was not clear how much of a stake the infrastructure investment trust (InvIT) will get in Patran Transmission.
IndiGrid is a InvIT sponsored by Sterlite Power Grid Ventures Limited. Sterlite Power is one of India’s largest tranmission companies.
The three new assets that have been transferred from Sterlite to the trust are RAPP Transmission Company, Purulia and Kharagpur Transmission Company and Maheshwaram Transmission. They are spread across Rajasthan, Madhya Pradesh, West Bengal, Jharkhand and Telangana.
“Both these acquisitions are highly accretive and will increase portfolio internal rate of return to 11% at current price,” the InvIT said.
The company said the investments will help the trust deliver a distribution of at least Rs 12 per unit for the next five years.
InvITs are ‘mutual funds’ that, instead of investing in stocks, invest in infrastructure assets. They can raise money from retail investors as well as large and organized players.
Within an InvIT, sponsors, such as Sterlite, are the firms which set up the InvITs. The trust will also have investment managers who manage assets and investments and the day-to-day activities. Besides this, it will have a project manager to look at the individual projects.
“In line with its vision of reaching an AUM of INR 300 billion, IndiGrid has successfully completed the first set of the acquisitions,” said Pratik Agarwal, Chief Executive Officer of IndiGrid.
“Further, we have demonstrated our ability to pursue third party assets by signing definitive agreements with Techno Electric. The fundamentals of the power transmission sector in India remain robust and IndiGrid will continue to acquire assets from both the Sponsor and third parties to further increase portfolio IRR”
The three assets purchased from Sterlite consist of 5 transmission lines aggregating 1,425 ckms, awarded on perpetual basis on a Build, Own, Operate and Maintain model through competitive bidding.
The residual contractual life of the assets is about 34 years and these inter-state assets operate under the Point of Connection mechanism.