Power Grid in talks with investors for Rs7,000 crore InvIT

State-owned Power Grid Corp. India Ltd (PGCIL) is in advanced talks with investors for its first tranche of projects through an infrastructure investment trust (InvIT), said a person aware of the development.

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.

“We were registered with SEBI as an InvIT on January 7, 2021,” the draft offer document said.

A PGCIL spokesperson declined comment.

InvITs manage income-generating infrastructure assets, typically offering investors a regular yield and a liquid method of investing in infrastructure projects. InvITs were 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.

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.

“Of the Sponsor TBCB Projects, we propose to acquire five projects initially with a total network of 11 power transmission lines of approximately 3,698.59 ckm and three substations having 6,630 MVA of aggregate transformation capacity, as of September 30, 2020, across five states in India,” the draft offer document stated.

Finance minister Nirmala Sitharaman in her FY22 budget speech spoke about PGCIL’s transmission assets being a part of the core infrastructure assets that will be rolled out under the asset monetisation programme.

Prime Minister Narendra Modi on Wednesday announced investment opportunities worth Rs2.5 trillion in the national asset monetisation pipeline outlined in the Union budget, through sale of around 100 assets of central public sector enterprises.

“We have set the target to monetize around 100 assets in oil, gas, port, airport and power sectors,” Modi said at a webinar on privatization and asset monetization attended by investment bankers, sovereign and pension funds as well as domestic and international investors.

The government has set a disinvestment target of ₹1.75 trillion for FY22, having failed to complete any big-ticket privatisation in FY21 due to disruptions caused by coronavirus pandemic. For FY21, it has pared its target to ₹32,000 crore from ₹2.1 trillion.

“Similarily, transmission assets of a value of Rs7,000 crore will be transferred to the PGCIL InvIT,” Sitharaman had said in her budget speech.

The union budget earlier this 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.