Wednesday, August 10, 2022

Power Grid’s InvIT IPO has got public sector excited for all right reasons. Here’s what you need to know

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  • Power Grid is set to offer five ‘initial portfolio assets’ at an enterprise value of Rs 10,384 crore for the InvIT

  • The offer will open on April 29 and close on May 3

New Delhi: State-run Power Grid Corporation of India Ltd (PGCIL) is set to announce the IPO of its first infrastructure investment trust (InvIT) on April 29, which would be a first by a public sector company in India. It will also be India’s third publicly listed InvIT after IndiGrid and IRB InvIT fund and the second in the electricity transmission sector. Power Grid has said that its issue comprises Rs 4,994 crore of fresh issuance and an offer for sale (OFS). 

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“The selling unitholder will be entitled to the proceeds of the offer for sale and the proceeds received from the offer for sale will not form part of the offer proceeds. The Trust will not receive any proceeds from the Offer for Sale,” said Power Grid in the filing.

Power Grid to offer 5 assets at enterprise value of Rs 10,384 cr

Power Grid is set to offer five ‘initial portfolio assets’ at an enterprise value of Rs 10,384 crore for the InvIT. The offer will open on April 29 and close on May 3. “The proceeds of the fresh issue in PG InvIT will be up to Rs 4,993.5 crore and will be utilised for providing loans to the Initial Portfolio Assets for repayment or pre-payment of debt, including any accrued interest, availed by the Initial Portfolio Assets; and general purposes,” said Power Grid in the filing.

The backdrop

The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, had approved the monetisation of assets of Power Grid worth Rs 7,000 crore through InvIT model in September 2020. Power Grid has assets worth over Rs 2 lakh crore and has made investments of Rs 1 lakh crore in setting up electricity transmission infrastructure. The InvIT will help Power Grid reduce its debt burden and will allow the government to increase its dividend receivables from the PSU.

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