Sterlite Power has successfully sold of its 14.7 per cent stake in India Grid Trust (IndiGrid) to institutional and high net worth individuals (HNI) investors.
Sterlite Power is the sponsor of IndiGrid, India’s first power sector InvIT, which saw its initial offer in 2017. Sterlite Power has now sold 14.7 per cent stake held by it in IndiGrid with the transaction valued at Rs.840 crore at a price of Rs.98 per unit.
Commenting on the transaction, Pratik Agarwal, Managing Director, Sterlite Power, said, “Sterlite Power is proud to have played a role in creating India’s first power sector InvIT which has grown over the years with participation from marquee investors. We will now focus on our core business as the developer of power transmission assets. We remain committed to executing asset transfers of about Rs.6,500 crore as per the framework agreement with IndiGrid.”
“We firmly believe that InvITs will remain a powerful platform to meet the large-scale financing requirements of the Infrastructure sector. The global financial markets will remain in yield-seeking mode for a considerable period, and this will provide enough capital supply to well-managed REITs and InvITs”, he further added.
There are four important parties to any InvIT —Sponsor, Investment Manager, Project Manager and the Trustee.
Highlights of the development
- As sponsor of IndiGrid, Sterlite Power needed to have its equity stake locked in for a minimum period of three months. Listing of units of IndiGrid took place on June 6, 2017.
- Now with the lock-in period over, Sterlite Power has exited its role as sponsor. However, Sterlite Power will continue to be associated with IndiGrid as a shareholder in Sterlite Investment Managers (SIML), the investment manager of IndiGrid. Global investment company KKR & Co Inc (known as KKR) is the majority stakeholder in SIML.
- The investment manager is responsible for operations pertaining to the Trust, such as distribution of cash flows, acquisition/ divestment of assets etc. along with all decisions in relation to the management and administration of IndiGrid’s assets and the investments of IndiGrid.
- Sterlite Power will focus on its role as developer of transmission assets in India and Brazil. It is also committed to transfer transmission assets of around Rs.6,500 crore as per the framework agreement with IndiGrid.
| Portfolio of IndiGrid: As of June 30, 2020 | |
| Parameter | Value |
| Assets Under Management (AUM) | Rs.122 billion |
| No. of transmission line assets | 20 |
| Length of transmission lines | 5,800 ckm |
| No. of transmission towers | 9,177 |
| No. of substation assets | 4 |
| Capacity of substations | 7,735 MVA |
- IndiGrid, as of June 30, 2020, had a portfolio of assets under management (AUM) of Rs.122 billion. IndiGrid has targeted to have AUM of Rs.300 billion by 2022.
- As of June 30, 2020 (which is before Sterlite Power sold its 14.7 per cent stake in IndiGrid) Esoteric II Pte Ltd (an affiliate of global investment company KKR & Co Inc) was the single largest holder in IndiGrid with a stake of 23 per cent.
- As per information available, Esoteric II was to acquire Sterlite Power’s stake in IndiGrid. However, this pact was terminated in early August this year. With the result, Esoteric II also withdrew its intent to be designated as “sponsor” of IndiGrid.
- In June 2020, market regulator SEBI introduced new guidelines that permitted sponsors of infrastructure investment trusts (InvITs) to exit from the InvITs after their minimum lock-in period of three years from date of listing. This is known as “declassification” of the status of a sponsor.
- The legal entity referred to as “Sterlite Power” in this story is “Sterlite Power Grid Ventures Ltd.”
(Featured photograph sourced from an investor presentation of IndiGrid)
