PowerGrid Infrastructure Investment Trust (InvIT) will knock on the doors of capital markets from April 29 to raise Rs 7,734 crore through an initial public offering (IPO) of its units. The public issue will remain open for bids by investors till May 3. With its public issue, PowerGridInvIT will become only the third InvIT to list on domestic stock exchanges, after IRB InvIT and IndiGrid Trust InvIT. Earlier in April, analysts had said that more REITs and InvITs could be expected after the Union Budget sought to make these asset classes more attractive for investors.
The IPO of PowerGrid InvIT comprises a fresh issue of units worth Rs 4,993 crore while Rs 2,741 crore will be an Offer For Sale (OFS) by existing unitholders. The price band for the issue has been fixed at Rs 99 – 100 per unit. Apart from anchor investors, all other bidders will be required to make a bid for a minimum of 1,100 units and in multiples thereafter. This would translate into a minimum investment of Rs 1.1 lakh for the upper end of the price band. PowerGrid InvIT has reserved 75% of the issue for Institutional investors while only 25% is for non-institutional investors.
PowerGrid InvIT said it will use the funds raised through the fresh issue to provide loans to the Initial Portfolio Assets for repayment or pre-payment of debt, including any accrued interest, availed by the initial portfolio assets. Among the five initial assets, PowerGrid Warora Transmission Limited has the highest outstanding amount of Rs 1,540 crore. The initial portfolio assets comprise PowerGrid Vizag Transmission, PowerGrid Kala Amb Transmission Limited, PowerGrid Parli Transmission Limited, PowerGrid Warora Transmission Limited, and PowerGrid Jabalpur Transmission Limited.
On successful listing, PowerGrid InvIT could become the first state-owned trust to explore this route to monetise its assets. The currently listed two trusts have private sector sponsors. So far both, IRB InvIT and IndiaGrid are trading at Rs 54.9 per unit, down 45% from its issue price. On the other hand, IndiGrid Trust InvIT is quoting a price of Rs 128 per unit, up from its issue price of Rs 100 per unit. Investors eye InvITs are dividend plays while preserving base capital. Currently, IRB InvIT, offer a pre-tax annual distribution yield of ~21%. For IndiGrid Trust, the distribution yield remains at 8.1%,