Acquisition of NER-II from Sterlite Power elevates AUM to ~INR 20,000 crore.
• NER-II acquired from Sterlite Power at an enterprise value of ~INR 4,625 crore
• NER-II consists of 2 Substations of ~1,260 MVA capacity and 4 Transmission Lines across ~830 ckms
• Acquisition to add ~INR 40-45 crore p.a. to the net distributable cash flow
India Grid Trust (“IndiGrid”) (NSE: INDIGRID), India’s first and the largest power sector infrastructure investment trust (InvIT), today completed the largest transmission project deal by acquiring NER-II Transmission Limited (“NER-II”) from Sterlite Power at an enterprise value of ~INR 4,625 crore. With this acquisition, IndiGrid’s AUM has increased by ~34% to ~INR 20,000 crore (USD 2.70 Bn). The platform’s asset portfolio now consists of 13 power transmission projects, with a total network of 38 power transmission lines and 11 substations extending over ~7,570 circuit kilometers & ~13,350 MVA in 17 Indian states and 1 Union Territory.
The acquisition of NER-II was envisaged as part of the Framework Agreement signed with Sterlite Power in April 2019. The Investment Manager of IndiGrid had signed a definitive share purchase agreement for the acquisition of NER-II on March 5, 2021. Pursuant to this, the unitholders’ approved the transaction unanimously with 100% of the votes cast in favour of the acquisition in the Extra-Ordinary General Meeting held on March 19, 2021.
NER-II is part of Inter State Transmission Scheme (ISTS) network, and was awarded on a Build, Own, Operate, Maintain (“BOOM”) basis with a contractual period of 35 years. The project has 11 elements including two substations of ~1,260 MVA capacity and four transmission lines extending over ~830 circuit kilometers. The asset spans across Assam, Arunachal Pradesh and Tripura and is of strategic importance for the delivery of power in one of the toughest regions in the country. This project will strengthen the power transmission network in the North Eastern States and address the of transmission, sub-transmission, and distribution system needs of the region.
Commenting on the acquisition, Harsh Shah, Chief Executive Officer of IndiGrid said “I am pleased to share that we have concluded one of the largest acquisitions in the Indian power transmission landscape within a short period of time from signing definitive agreements. FY21 has been a transformational year for IndiGrid with ~INR 7,500 crore acquisitions across Inter-State transmission, Intra-State transmission, and regulated tariff transmission projects as well as our first solar project. These accretive acquisitions have augmented our ability to grow DPU which is evident in our recent increase to INR 12.40 per annum.
Going forward, with a robust acquisition pipeline and proposed equity infusion via Rights Issue, IndiGrid is in a steadfast position to capitalize on the growth opportunities and become the most admired yield vehicle in Asia.”
Commenting on the transaction, Pratik Agarwal, Managing Director, Sterlite Power said “We are delighted to have successfully closed the sale of NER-II to India Grid Trust. This marks our tenth successful asset transfer, in under 4 years. This mega project will bring reliable power to 5.3 crore people in India’s north east region. The transaction is another validation of our pioneering equity recycling model and our ability to garner tremendous investor interest in our transmission assets.”
Cyril Amarchand and Mangaldas, PriceWater Coopers, L&T-S&L and J. Sagar Associates advised IndiGrid on this transaction.