The Adani Group is in talks with Kalpataru Power Transmission Ltd (KPTL) for the sale of the latter’s 4 transmission lines to Adani Transmission, the largest private sector power transmission company in India, two people aware of the development told Mint.
“Adani is also now actively bidding for the KPTL assets," the first person said. The Economic Times had reported last month that Sekura Energy and China Light and Power (CLP) were also in talks for the same assets. “The final race comes down to the three of them and who can offer the most, since KPTL has long concession periods backing their assets," the person added.
KPTL has put 4 transmission lines on the block, of which two are operational – a 100-km transmission line in Jhajjar, Haryana, and a 240 km line in Satpura, Madhya Pradesh. Both were developed in the build-own-operate-maintain model and have 25-year concession periods. The company is also constructing two other transmission lines, the Alipurduar transmission line for transferring power to Bhutan and the Kohima-Mariani transmission line for strengthening the north-eastern grid. The deal will be valued at ₹1400-1500 crore, he added and KPTL is being advised by EY, he added.
KPTL invested equity of ₹349 crore for a total project cost of ₹3200 crore, according to the company’s stock exchange filings. KPTL has an order book of ₹14,167 crores as on December 2018 and reported 9 month – FY19 revenue of ₹4624 crore. Net debt stood at ₹755.2 crore as of December-end.
When contacted, a spokesperson for Adani Transmission said: “As a part of the company’s business growth strategy, we continue to evaluate various viable options. The company however doesn’t comment on speculations." Emails to KPTL and EY went unanswered till the time of going to print.
Adani Transmission, with a cumulative transmission network of 12,000 circuit km (ckm), is one of the largest in the segment in India. Last November, it bought 3,063 ckm of transmission lines from stressed Reliance Infrastructure for ₹1,000 crore while also signing an agreement to buy KEC International’s power transmission arm for ₹227.5 crore. In January, Mint reported that Adani Transmission planned to raise ₹3000 crore through a qualified institutional placement to reduce debt and fund acquisitions.
Sekura Energy Ltd, an energy infrastructure platform backed by Edelweiss Infrastructure Yield Plus fund, has also signed an agreement with to acquire two operating power transmission assets from Essel Infraprojects Ltd. CLP India, which is 40% owned by Canadian pension fund Caisse de dépôt et placement du Québec, had also shown interest in these assets and is still waiting to make its first transmission investment in the country.
Offering steady and low-risk cash flows, the Indian power transmission sector is attracting the interest of a whole host of long-term patient capital investors looking for to put their money in domestic infrastructure. The Central Electricity Authority has said that 46,000MW of installed power capacity in India is stranded because of poor last-mile connectivity and inadequate transmission and distribution infrastructure. Building this capacity will attract investments of ₹2.5-3 trillion over the next five years and the sector was opened to private participation in 2010. In 2019 alone, the central government is expected to offer projects worth roughly ₹8000 crore for competitive bidding, forcing private sector companies to free up their capital from operating assets in order to participate in upcoming bids.