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IndiGrid InvIT to acquire northeast power transmission project for 4,625 crore

The 830 circuit-km long NER-II Transmission Ltd project is spread across Assam, Arunachal Pradesh and Tripura and post the deal completion, will raise IndiGrid’ assets under management to $2.8 billion.. Photo: BloombergPremium
The 830 circuit-km long NER-II Transmission Ltd project is spread across Assam, Arunachal Pradesh and Tripura and post the deal completion, will raise IndiGrid’ assets under management to $2.8 billion.. Photo: Bloomberg

  • This transaction comes in the backdrop of the government expediting strategic North Eastern Region Power System Improvement Project as part of the strategy of accelerating infrastructure development along the country’s frontier

New Delhi: India Grid Trust (IndiGrid), an infrastructure investment trust (InvIT), on Saturday inked an agreement to acquire a power transmission project in the northeast for 4,625 crore from Sterlite Power, the firm said in a statement.

The investment manager of IndiGrid, sponsored by Sterlite Power Grid Ventures Ltd, is majority owned by KKR.

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.

The union budget, presented last month, announced exempting dividend payments made to real estate investment trusts (REIT) and InvITs from TDS, and enabling debt financing of InvITs and REITs by foreign portfolio investors.

The 830 circuit-km long NER-II Transmission Ltd project is spread across Assam, Arunachal Pradesh and Tripura and post the deal completion, will raise IndiGrid’ assets under management to $2.8 billion.

This transaction comes in the backdrop of 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.

“Post completion, the platform’s asset portfolio would consist of 13 power transmission projects, with a total network of 38 power transmission lines and 11 substations extending over -7,570 circuit kilometers and 13,350 MVA in 17 Indian states and 1 Union Territory," the statement said.

Sterlite Power has around 13,700 circuit kms and 26,100 MVA in India and Brazil.

“IndiGrid had signed a framework agreement in April 2019 with Sterlite Power for acquisition of NER-II upon commissioning. This transaction is expected to be consummated during Q4 FY21, subject to unitholders’ approval, regulatory approvals, and other customary closing adjustments," the statement added.

Also, state-owned Power Grid Corp. India Ltd (PGCIL) is in advanced talks with investors for its first tranche of projects through an InvIT. The draft offer document for this first tranche of projects held in a special purpose vehicle (SPVs) through an InvIT has been filed with the Securities and Exchange Board of India (Sebi) for monetising five of its tariff-based competitive bidding (TBCB) assets valued at about Rs7,000 crore.

PGCIL is among the first state-owned companies to offer an InvIT as part of the government’s brownfield asset monetisation strategy, with the trust expected to attract domestic and global investors, including sovereign wealth funds. After the first tranche, a Rs10,000 crore worth second tranche is also in the works as reported by Mint earlier.


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