IndiGrid set to acquire assets worth Rs 11,500 crore within two years, eyes IRR of 12%

Sterlite Power-sponsored infrastructure trust IndiGrid InvIT has raised Rs 2,500 crore via preferential allotment at Rs 83.89 a share.

One of the only two infrastructure trusts listed in India, IndiGrid needs fresh capital to fuel its growth strategy. The company will utilise the funds to acquire new assets.

Marquee investors KKR and GIC, with Rs 1084 crore and Rs 980 crore respectively, are the largest investors in the firm. Both would own around 57 percent of IndiGrid post issue. The rest have been invested by other capital market investors. KKR also becomes a co-sponsor of IndiGrid along with Sterlite Power.

IndiGrid will buy 5 transmission assets from Sterlite Power, two of them to be bought immediately and three later on. The two assets will be bought for Rs 5000 crore.

"We will use debt as well equity to acquire assets and plan to acquire around Rs 11,500 crore of assets over the next two years. To start with, the debt-equity would be 49 percent because we would acquire Rs 5000 crore of assets now and subsequently would increase leverage on our platform to go up to 67-68 percent and this while maintaining our rating at AAA,”  IndiGrid Chief Executive Officer Harsh Shah told CNBC-TV18.

“After the acquisition worth Rs 5,000 crore, they will achieve an Internal Rate of Return (IRR) of 10.7 percent at a unit price of Rs 100, but at current market price it would be substantially higher than that, “said Shah.

Meanwhile, IndiGrid investors are getting the benefit of two internationally acclaimed investors and operator of transmission assets, he said. “KKR brings in a global investment management expertise to IndiGrid via this majority interest and Sterlite Power brings global technical and operating expertise as project manager to run these assets for us via this partnership,” he added.