After the splendid success of IRB InvIT Fund IPO, now the India Grid InvIT IPO is all set to capture the segment. IndiGrid InvIT Fund IPO was incorporated in the year 2016. It is an infrastructure investment trust (InvIT), which was established to own inter-state power transmission assets in India. Their central point of attention is mainly on providing constant and reasonable distributions to their unitholders. IndiGrid Trust plans to raise Rs 2,250 crore through an initial public offer (IPO). The Trust not only allows infrastructure developers to deleverage their balance sheets but also refinance remaining debt at a low rate of interest.
It has been sponsored by Sterlite Power Grid Ventures Ltd, which is one of the topmost leading companies operating in the private sector, with great experience in bidding, designing, financing, constructing and maintaining power transmission projects across India.
The sponsored company owns 11 inter-state power transmission projects with a total network of 30 power transmission lines of approximately 7,733 circuit km and 9 substations having 13,890 MVA of transformation capacity.
Issue Open: May 17, 2017
Isuue Close: May 19, 2017
Issue Size: Rs 2,250 Crores
Face Value: Rs 10 per unit
Issue price band: Rs 98 to Rs 100 per unit
Market lot: Minimum lot of Rs 10,205 units @ Rs 98 to Rs 100 per unit.
Minimum Investment: Rs 10 Lakhs on lower price band
Morgan Stanley, Citigroup Global Markets India, Edelweiss Financial Services.
Objects of the issue
It is to provide a loan to BDTL and JTCL for the repayment or prepayment of debt of banks, financial institutions, SGL1, SGL2.
The other object of the issue is the repayment of any other long term and short term liabilities and capital expenditure creditors.
IndiGrid InvIT Fund IPO is provided with the corporate credit rating of “AAA”/Stable by Crisil, “IrAAA”/Stable by ICRA and IND “AAA”/Stable by India Ratings.
What are InvITs?
An InvIT is a new capital market product promoted by the Government to enable Infrastructure Developers to free up tied-up capital. InvITs are designed to attract low-cost long term capital from FIIs, Insurance and Pension Funds and the DIIs (mutual funds, Banks) which will also benefit to HNIs .
India Grid Trust, an infrastructure investment trust (InvIT), raised over Rs 1,012 crore from anchor investors ahead of its initial share- sale offer opening today.
Among the anchor investors are Deutsche Global Infrastructure Fund, Credit Suisse (Singapore), Reliance Nippon Life Insurance Company, Copthall Mauritius Investment and Edelweiss Tokio Life Insurance Company.
Comparison b/w IRB and IndiGrid InvITs
Dividend Policy where investors may get rewards
At least 90% of distributed cash flow of the SPV shall be distributed to the InvIT in proportion to its holding in the SPV.
At least 90% of distributable cash flow of the InvIT shall be distributed to the unit holders.
Dividends are announced to be paid within 15 days of the establishment.
Reasons to invest in IndiGrid InvIT Fund IPO (Positive points)
It has a strong financial position in the market.
It is considered as the second company to get approved from SEBI under InvIT after IRB Fund.
It is the first trust in the power sector to get formed in InvIT regulations.
It has a constant cash flow from assets with little counterparty risks.
It has a good credit rating. CARE has rated as CARE AAA (Stable) IND RA as IND AAA Outlook Stable and ICRA as IR AAA. These ratings indicate credit worthiness of trust.
Out of the available cash flows, 90% of it would be distributed to unit holders by way of dividend which is tax-free.
It has Strong corporate governance and skilled and experienced investment managers.
It has its own ownership for the allotment of assets.
How REITs and InvITs will be a game changer for Indian real estate and Infra sector.
Reasons not to invest in IndiGrid InvIT Fund IPO
It is a new organization which doesn’t have an established operating history. Thus, it will be difficult to assess the future performance of the organization.
They may lose tariff revenues and incur significant repair and replacement costs in its power transmission projects are rendered inoperable due to force majeure events.
IndiGrid may be unable to operate and maintain its power transmission projects to achieve the authorized
At its worst, when the government regulation will change, then it would deeply affect its probability and ability to make distributions.
If the sponsor will get issues with some new units, then it will reduce the holding of the other unit holders.
More than 4 lakh Pune flat buyers are victims of the builders
To a large extent, all its revenues are derived from tariff payments received from LTTCs. So, if there is any delay in payments of the point of connection, then the charges to the CTU by the users and customers may affect the resultant cash flows and operations.
The potential of the project managers is to ensure that its power transmission systems are fully operational at all the times may be subject to the limitations of the power grid, existing equipment or operational risks outside of their control.
The initial portfolio asset may not achieve the projected financial performance referred to in the financial projections, which could deeply affect its ability to meet its projected distributions to its Unitholders.
Grey market premium
Currently Grey market premium is Rs. 5 /-
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