Investment trust IndiGrid on Friday inked an agreement to acquire 100 per cent equity stake in NER II Transmission from Sterlite Power for about Rs 4,625 crore. The completion of acquisition would depend upon receipt of unitholders' consent, regulatory and other relevant approvals, it said.
"India Grid Trust (IndiGrid) signed share purchase agreement on March 5, 2021 for acquisition of 100 per cent shareholding and economic interest, in one or more tranches, in NER II Transmission Ltd from Sterlite Grid 4 Ltd," a company statement said. Sterlite Grid is a wholly-owned subsidiary of Sterlite Power Transmission Ltd, one of the sponsors of IndiGrid.
According to the statement, the 100 per cent equity stake will be acquired at an enterprise value not exceeding Rs 4,625 crore subject to all other adjustments. The indicative value of the acquisition is Rs 4,625 crore and would boost IndiGrid's asset under management (AUM) by 34 per cent to over Rs 20,000 crore (USD 2.8 billion). 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 & 13,350 MVA in 17 Indian states and 1 Union Territory.
NER-II is part of Inter-State Transmission Scheme network, and was awarded on a Build, Own, Operate, Maintain ("BOOM") basis with a contractual period of 35 years. The project has 11 elements including two substations of 1,260 MVA capacity and four transmission lines extending over 830 circuit kilometers. 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 project will strengthen the power transmission network in the North Eastern States and address the transmission, sub-transmission, and distribution system needs of the region.
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 fourth quarter of 2020-21, subject to unitholders' approval, regulatory approvals, and other customary closing adjustments.
The acquisition will be funded through a combination of internal accruals, debt, equity proceeds from the preference issue done in May 2019 and forthcoming rights issue. Post this acquisition, the net debt/AUM would stand at 64 per cent.
"NER-II fits well with our strategy of focusing on operating assets with long term cash flows and minimal counterparty risk. This acquisition would be DPU (distribution per unit) accretive and augment our recent increase of DPU to Rs 12.40 per annum for a considerable period," Harsh Shah, Chief Executive Officer of IndiGrid, said.
With a robust acquisition pipeline and support from our sponsors, IndiGrid is well positioned to execute its plans for providing stable and growing DPU while maintaining a robust balance sheet, he added.
Pratik Agarwal, Managing Director, Sterlite Power said this mega transmission project will help deliver reliable power for 5.3 crore people in India's north eastern region.
IndiGrid has acquired Rs 8,300 crore worth of assets since the last capital raise including Rs 7,100 crore of Framework/ROFO projects from Sterlite Power and the first cost-plus transmission asset from Reliance Infrastructure. It has also announced its foray into renewables sector with the planned acquisition of 138 MW solar asset worth Rs 6.6 crore.
Separately, in 2020-21, KKR was inducted as a sponsor following the Rs 2,510 crore preferential issue in 2019 which was subscribed by KKR and GIC amongst other marquee investors. KKR has also acquired a majority interest in the Investment Manager of IndiGrid.