KKR-backed IndiGrid acquires transmission asset for $134m
India Grid Trust (IndiGrid), an infrastructure investment trust backed by KKR and GIC Private, has acquired a power distribution company in northeast India for INR10.2 billion ($134 million).
KKR and GIC acquired stakes in IndiGrid last year for INR20.6 billion. Infrastructure investment trusts are fund-like instruments that pool infrastructure assets and raise capital from institutional and retail investors.
Sterlite Power, a developer of power infrastructure in India and Brazil, created IndiGrid to support its plans to grow its global footprint. It operates the eight power distribution projects owned by the infrastructure investment trust.
According to a release, IndiGrid has acquired East North Interconnection (ENICL), an inter-state transmission network managed by Sterlite. Sterlite plans to sell three more projects to IndiGrid in the coming years.
Two force majeure events related to unseasonal flooding in the last two years crippled ENICL’s activities, according to a credit report by India Ratings & Research. ENICL sold the rights to this asset to IndiGrid after restoring a transmission line in December. IndiGrid states that ENICL is a key asset for power exchange across northeast and east India.
“Sterlite Power is proud to successfully close the ENICL sale process in these turbulent times. This marks our eighth asset transfer to India Grid Trust and demonstrates our strong ability to commission and deconsolidate these system-critical assets from our balance sheet,” said Pratik Agarwal, a managing director at Sterlite.
India is the world’s third largest consumer and producer of electricity. Powergrid, a government-owned listed company, owns more than 85% of the assets related to the country’s transmission network. The government has said it welcomes private sector investment, particularly in inter-state transmission projects, to help support rising electricity needs.
IndiGrid shares closed at INR88.95 on March 24 following the ENICL announcement. This compares to INR82 at the time of KKR’s investment. The stock reached as high as INR100.5 last month.
IndiGrid is India’s first infrastructure investment trust in the power sector. Other infrastructure investment trusts in the country include road assets-related investment vehicles in IRB and IndInfravit.
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