PremiumNEW DELHI: India Grid Trust (IndiGrid), an infrastructure investment trust (InvIT), has completed the acquisition of an 830 circuit km power transmission project in the Northeast, at an enterprise value of ₹4,625 crore from Sterlite Power, the firm said in a statement on Saturday.
The NER-II Transmission Ltd project is spread across Assam, Arunachal Pradesh and Tripura and post the deal completion, will up IndiGrid’s assets under management to $2.8 billion. The investment manager of IndiGrid sponsored by Sterlite Power Grid Ventures Ltd is majority owned by KKR.
“With this acquisition, IndiGrid’s AUM has increased by ~34% to ~INR 20,000 Cr (USD 2.70 Bn). The platform’s asset portfolio now consists of 13 power transmission projects, with a total network of 38 power transmission lines and 11 substations extending over ~7,570 circuit km and ~13,350 MVA in 17 Indian states and 1 Union territory," the statement added.
InvITs manage income-generating infrastructure assets, typically offering investors a regular yield and a liquid method of investing in infrastructure projects. InvITs were also proposed by the government as an alternative fundraising route for state-run companies to manage their funding requirements without having to depend on government support.
“NER-II is part of Inter State Transmission Scheme (ISTS) network, and was awarded on a Build, Own, Operate, Maintain (“BOOM") basis with a contractual period of 35 years," the statement said and added, “The asset spans across Assam, Arunachal Pradesh and Tripura and is of strategic importance for the delivery of power in one of the toughest regions in the country."
This transaction comes against the backdrop of the Indian government expediting strategic North Eastern Region Power System Improvement Project as part of the strategy of accelerating infrastructure development along the country’s frontier and strengthening intra-state transmission and distribution electricity links.
“The acquisition of NER-II was envisaged as part of the Framework Agreement signed with Sterlite Power in April 2019. The Investment Manager of IndiGrid had signed a definitive share purchase agreement for the acquisition of NER-II on March 5, 2021," the statement said.
Sterlite Power has around 13,700 circuit km and 26,100 MVA in India and Brazil.
The Union budget presented last month announced exempting dividend payments made to real estate investment trusts (Reit) and InvITs from tax deduction at source (TDS) and enabling debt financing of InvITs and Reits by foreign portfolio investors.
