KKR, GIC invest in Indian power grid operator

KKR will commit INR10.8 billion for an initial 22% stake, while GIC will pay INR9.8 billion for 20%. KRR may subsequently acquire an additional 15%. According to a release, the private equity firm will separately acquire a 20% position in India Grid’s management company, Sterlite Investment Managers, with a view to taking a 74% stake across a series of later investments.

India Grid, also known as IndiGrid, was established in 2016 by Sterlite Power Grid Ventures and listed the following year. Infrastructure investment trusts are fund-like instruments that pool infrastructure assets and raise capital from institutional and retail investors.

IndiGrid assets include seven fully commissioned power distribution companies, which have a total network of 13 power transmission systems across nine states, as well as three substations in three states. The trust will spend INR11.5 billion of the proceeds from the proposed investment on two new power projects. Separately, it plans to acquire an additional three worth a combined INR65 billion.

The offer aims to raise INR2.6 billion in total and contemplates a floor price of INR83.89 per share. IndiGrid last closed at INR82, in line with its medium-term range, although earlier this month it reached as high as INR85.5. Revenue and profit for the year ended March 2019 were INR6.6 billion and INR1.5 billion, respectively. This compares to INR4.5 billion and INR2 billion the prior year.

India is the third-largest consumer of electricity with a global share of about 5.5%. The country’s energy and utilities sectors have attracted growing investment interest in recent years as the government has sought to reduce dependency on imports and improve rural electrification through increased supply. More than 200 million Indians are estimated to live without electricity.

Standard Chartered Private Equity became the first foreign investor in India’s power transmission sector when it committed INR5 billion to a fiber optic infrastructure, power conductors and cables affiliate of Sterlite Power in 2014. The private equity firm exited its 28.4% stake in the company last year on undisclosed terms but claimed to make a 2x return on the deal. 

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• Topics
• South Asia
• Infrastructure
• PIPEs
• India
• KKR
• GIC Private
• energy