IndiGrid, the infrastructure investment trust backed by KKR, will acquire the acquisition of East North Interconnection Company for Rs 1,020 crore from Sterlite Power, the InvIt informed the bourses on Wednesday.
The transaction is an extension of a deal signed between IndiGrid and Sterlite Power in May last year, which gave the former the right of first offer on latter’s projects. After this transaction, IndiGrid would have another Rs 6,500 crore of transmission projects in the pipeline under the framework agreement with Sterlite Power, which would take its assets under management to Rs 18,000 crore over the next two years.
“Our strategy is to focus on accretive acquisitions to provide superior total returns to investors. We are committed to grow IndiGrid with accretive acquisition of operating projects with long-term stable cash flows and low counterparty risks to achieve Rs 30,000 crore of AUM by 2022, while providing predictable and growing distributions to our investors,” said Harsh Shah, Chief Executive Officer of IndiGrid.
IndiGrid will be acquiring three more assets from Sterlite Power, as per the agreement, over the next 6-18 months.
Sterlite Power set up IndiGrid in 2016 to transfer assets to the InvIT as a part of its deleveraging strategy. In May 2019, IndiGrid raised Rs 2,560 crore through a preferential issue of units to qualified institutional investors, of which Rs 1,084 crore was invested by KKR while the balance Rs 980 crore by GIC Infra Holdings Pte. Following this, IndiGrid is managed by Sterlite Investment Managers which is majority-owned by KKR.
“As IndiGrid is leveraged at around 45% net debt /AUM, it will be able to acquire ENICL without any dilution. This acquisition will be funded by internal accruals, proceeds from the preference issue done in May 2019 and new debt,” the company said.
The acquisition is likely to be closed by fourth quarter of FY20, subject to unitholders’ approval, execution of definitive agreements and regulatory approvals. With this acquisition, IndiGrid will have nine power transmission projects with a total network of 20 power transmission lines that span more than 5,800 circuit kilometers across 13 Indian states.
Source: Economic Times