India Grid Trust (“IndiGrid”) has completed acquisition of another transmission asset - Gurgaon Palwal Transmission Limited (“GPTL”), from Sterlite Power at an enterprise value of ~INR 10.8 Bn (USD 150 Mn). With this acquisition, IndiGrid’s AUM has increased by ~9% to ~INR 133 Bn (USD 1.80 Bn). IndiGrid’s asset portfolio will now consist of 10 power transmission projects, with a total network of 25 power transmission lines and 7 substations extending over ~6,080 circuit kilometres & 10,735 MVA in 15 Indian states.
GPTL is part of Inter State Transmission Scheme (ISTS) network and consists of three gas-insulated substations (GIS) with a total transformation capacity of 3,000 MVA and ~270 circuit kilometers of 400 KV transmission lines spread across Uttar Pradesh, Haryana and Rajasthan. This project is built with a substantial focus on environmental, social and governance (ESG) aspects. It is a strategic asset for ensuring reliable power supply in the region which may reduce the carbon emissions by reducing dependence on DG sets. The land requirement for this project is also substantially reduced with innovatively designed vertical GIS substation and monopole towers with micro-piling.
The acquisition of GPTL was envisaged as part of the framework agreement signed with Sterlite Power in April 2019 for acquisition of three assets upon commissioning. This acquisition has been funded by internal accruals, proceeds from the preference issue done in May 2019 and new debt. With this investment, IndiGrid’s net debt/AUM will be at ~53%, significantly below the 70% leverage threshold as per SEBI InvIT Regulations.
Commenting on the acquisition, Harsh Shah, Chief Executive Officer of IndiGrid, said “This acquisition is in line with our strategy to acquire accretive assets with low operating risk and long-term certainty of cash flows. We continue our efforts to increase unitholders’ returns by creating a solid growth pipeline for the future while providing predictable distribution. IndiGrid has another ~INR 55 Bn (USD 750 Mn) pipeline of transmission projects under the framework agreement with Sterlite Power providing visibility of ~INR 180 Bn (USD 2.50 Bn) of AUM over next two years. This acquisition is a testament to our consistent track record of aggregating good quality projects with the vision of enhancing investor returns while maintaining a strong balance sheet. “
Commenting on the transaction, Anuraag Srivastava, Group CFO, Sterlite Power, said, “We are proud to successfully close yet another asset sale in these unprecedented times. GPTL sale marks our ninth asset transfer to India Grid Trust. With this, we have transferred about ~INR 123 Bn (USD 1.70 Bn) worth transmission assets to IndiGrid till date. The sale of this strategic project amidst a challenging market situation is a clear validation of the pioneering asset monetization model and our ability to commission high quality projects with long term stable cash flows. We look forward to commissioning more assets and transfer about another ~INR 55 Bn (INR 750 Mn) worth of assets to IndiGrid over a period of time.”
In FY20, IndiGrid raised ~INR 25.1 Bn (USD 340 Mn) of capital by way of preferential issue which was subscribed by KKR and GIC amongst other marquee investors. It acquired NRSS XXIX and OGPTL projects from Sterlite Power for ~INR 50 Bn (USD 680 Mn). In addition to that, it had entered into an exclusive framework agreement with Sterlite Power to acquire three projects worth ~INR 65 Bn (USD 890 Mn) as and when they are commissioned, of which GPTL has now been acquired by IndiGrid. KKR also acquired majority interest in the Investment Manager of IndiGrid.
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