PowerGrid Infrastructure Investment Trust (InvIT) will knock on the doors of capital markets from April 29 to raise Rs 7,734 crore by way of an initial public supplying (IPO) of its units. The public problem will stay open for bids by investors till May 3. With its public problem, PowerGridInvIT will turn out to be only the third InvIT to list on domestic stock exchanges, just after IRB InvIT and IndiGrid Trust InvIT. Earlier in April, analysts had mentioned that more REITs and InvITs could be anticipated just after the Union Budget sought to make these asset classes more appealing for investors.
The IPO of PowerGrid InvIT comprises a fresh problem of units worth Rs 4,993 crore even though Rs 2,741 crore will be an Offer For Sale (OFS) by current unitholders. The value band for the problem has been fixed at Rs 99 – one hundred per unit. Apart from anchor investors, all other bidders will be expected to make a bid for a minimum of 1,one hundred units and in multiples thereafter. This would translate into a minimum investment of Rs 1.1 lakh for the upper finish of the value band. PowerGrid InvIT has reserved 75% of the problem for Institutional investors even though only 25% is for non-institutional investors.
PowerGrid InvIT mentioned it will use the funds raised by way of the fresh problem to provide loans to the Initial Portfolio Assets for repayment or pre-payment of debt, which includes any accrued interest, availed by the initial portfolio assets. Among the 5 initial assets, PowerGrid Warora Transmission Limited has the highest outstanding quantity 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 profitable listing, PowerGrid InvIT could turn out to be the very first state-owned trust to discover this route to monetise its assets. The presently listed two trusts have private sector sponsors. So far each, IRB InvIT and IndiaGrid are trading at Rs 54.9 per unit, down 45% from its problem value. On the other hand, IndiGrid Trust InvIT is quoting a value of Rs 128 per unit, up from its problem value of Rs one hundred per unit. Investors eye InvITs are dividend plays even though preserving base capital. Currently, IRB InvIT, provide a pre-tax annual distribution yield of ~21%. For IndiGrid Trust, the distribution yield remains at 8.1%,