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Freepik

Power Grid Corporation of India is likely to launch its first-ever InvIT (infrastructure investment trust) IPO next week. According to news reports, the IPO by a state-owned firm on April 29 will be a landmark deal for the Indian capital markets. Earlier in 2017, IRB InvIT and India Grid Trust went public.

Power Grid is a public limited company incorporated on October 23, 1989. As of December 31, 2020, the government of India held 51.34 percent of the shares of the company, with the remaining being held by public shareholders including mutual funds, financial institutions, insurance companies and foreign institutional investors.

The move by Power Grid comes at a time when the government has set a disinvestment target of Rs 1.75 lakh crore for FY22 and is betting big on initial public offerings (IPOs) by Life Insurance Corporation and Air India IPOs, after coming up short in the previous financial year, a report in Moneycontrol said.

According to a report in Mint, this will also be the first time a state-owned entity is monetizing its infrastructure assets through the InvIT route.

An InvIT is a collective investment scheme similar to a mutual fund, which enables direct investment of money from individual and institutional investors in infrastructure projects to earn a small portion of the income as return.

“This is a big transaction and the size of the IPO is likely to be around Rs 7,700 crore, with a primary component of around Rs 4,500 crores and the balance making up the secondary component. The price band is likely to be announced on April 29,” said Moneycontrol quoting a source.

The InvIT will reportedly comprise of 11 power transmission lines owned and operated by Power Grid.

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