₹1,500 Cr QIP: Power InvIT Jumps After Plan to Raise Funds to Acquire Gadag Transmission

Synopsis: IndiGrid Infrastructure Trust launches a Rs. 1,500 cr QIP issuing up to 9.2 cr units at a Rs. 167.42 floor price, company to acquire Gadag Transmission (2,500 MW solar evacuation), with 60.5% net debt/AUM and 60–90 day lock-ins.

This is India’s first listed power sector infrastructure trust which is founded by KKR and Sterlite Power to own and operate transmission and renewable energy assets, primarily acquiring operational transmission SPVs is now in the spotlight after  launching a Qualified Institutional Placement (QIP) to raise up to Rs. 1,500 crore

With a market capitalisation of Rs. 14,155 cr, the shares of IndiGrid Infrastructure Trust Ltd are currently trading at 164.50 per share, down from its previous close of Rs. 164.59 per share. The InvIT has generated a 13.5% return over the past year, 5% over the last six months, but declined 2.5% in the past month.

QIP Launch and Fundraising Details

IndiGrid Infrastructure Trust has officially launched a Qualified Institutional Placement (QIP) to raise up to Rs. 1,500 crore, aiming to strengthen its financial position and fund strategic growth initiatives. The QIP involves the issuance of up to 9.2 crore units, with a base size of approximately 7.3 crore units. 

Pricing and Premium Floor

The floor price for the QIP has been set at Rs. 167.42 per unit, which represents a premium over the company’s closing price on Monday. This pricing strategy is designed to reflect the underlying value of the trust while making the offering attractive to institutional investors. The premium signals market confidence in IndiGrid’s growth prospects and the value of its existing and pipeline assets.

Acquisition of Gadag Transmission

IndiGrid is leveraging Gadag Transmission, Ltd.’s acquisition as part of its strategy to attain long-term growth through acquisitions that have a focus on renewable energy. Gadag Transmission will strengthen IndiGrid’s portfolio in renewable energy evacuation infrastructure by enhancing its transmission system and integrating clean energy into the country’s electric grid.

Gadag Transmission’s designation as an interstate transmission system is the first step in providing infrastructure for the evacuation of about 2,500 MWs of solar electric generation capabilities from the Gadag Solar Power Zone in Karnataka. Gadag Transmission demonstrates IndiGrid’s commitment to integrating large-scale levels of renewable energy into its systems.

ReNew Transmission Ventures Private Ltd (RTVPL), a subsidiary of the Government of India, holds 51% of Gadag Transmission Ltd, while KNI India AS holds 49%. KNI India AS is a joint venture between the Norwegian government’s investment fund (Norfund) and the Norwegian municipal pensions fund (KLP). Once the deal closes, IndiGrid will take full ownership and management control of Gadag Transmission Ltd as stipulated by the terms of the definitive and concession agreements.

The debt level of 60.5% of AUM provides the company with adequate capacity to continue expanding its business in the future. IndiGrid intends to finance its continued expansion through the use of equity, internally generated cash flows and borrowings. The company will maintain a prudent approach to its financing strategy while fostering its ability to increase its autonomy with respect to managing leverage levels through a responsible approach to capitalizing on increased scale in the marketplace.

Lock-in Periods for Key Stakeholders

To ensure stability post-QIP, the trust has set specific lock-in periods for different stakeholders. The investment manager and trustee are subject to a 90-day lock-in, while the sponsor will face a 60-day lock-in from the date of allotment. These measures are standard practice in QIPs to prevent immediate trading that could impact market perception or unit prices.

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