Power Grid Introduces PGInvIT, May Offer 18 more Assets in Future

Power Grid Corporation of India (PGCIL) has set up its Infrastructure Investment Trust (InvIT), and turns as the first public sector company to do so.

PGInvIT has offered a price band of 99-100 per unit for the public issue. The issue would initiate from April 29 and terminate on May 3. The InvIT would now raise 4,993.5 crore as a fresh issuance and PGCIL is also providing an offer for sale of Rs 2,742 crore of existing units. PGCIL has offered five ‘initial portfolio assets’ at an enterprise value of 10,384 crore for the offered PGInvIT.

K Sreekanth, chairman and managing director, PGCIL says, “Power grid has 18 projects with 22,500 crore investment which are under construction. As per our plans, they will be offered to InvIT in the future. The government has allowed Power Grid to monetise its other TBCB subsidiaries through the InvIT route, which are under construction or will be acquired by it in the future.”

The net profits from the offer would be used for offering loans to the initial portfolio assets for repayment or pre-payment of debt, that inlcude any accrued interest, availed by the initial portfolio assets; and for general purposes, says PGCIL, which is the sponsor of the invIT.

PGCIL acquires power transmission projects through two routes – nomination under which the Centre or state government allots projects or through competitive bidding (TBCB) route.

Sreekanth said the current TBCB portfolio of PGCIL has Rs 5,000 crore worth of operational assets and seven under construction projects at an estimated cost of Rs 12,200 crore.

These include four projects which are for renewable energy linking. “These can be considered for transfer to the InvIT. We are seeing significant growth in the renewable energy and intra-state transmission segment. PGCIL recently won five TBCB projects,” he said.

PGCIL would also be the project manager of the InvIT and would continue to provide operations and management services to the initial portfolio assets.

IDBI Trusteeship Services Limited is the Trustee and POWERGRID Unchahar Transmission Limited is the Investment Manager of the InvIT. The Lead Managers to the Offer are ICICI Securities Limited, Axis Capital Limited, Edelweiss Financial Services Limited and HSBC Securities and Capital Markets (India) Private Limited.

The Union Cabinet in September 2020 approved monetisation of assets of PGCIL through the InvIT model. It says, “This approval would help PGCIL to monetise in the first lot, assets with gross block value of more than 7000 crore. These assets, which are mainly High Voltage Transmission lines and substations, are held by PGCIL in the form of Special Purpose Vehicles (SPVs). The proceeds from the asset monetization would be deployed by PGCIL in their new and under-construction projects.”

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