PowerGrid Infrastructure Investment Trust (InvIT) IPO will open for subscription tomorrow, creating it the initial InvIT to be sponsored by a state-run firm. PowerGrid InvIT is seeking to raise Rs 7,735 crore by way of the situation which will contain a fresh situation as nicely as an supply for sale (OFS) of current units. PowerGrid InvIT would turn into only the third InvIT to be listed on the bourses immediately after IndiaGrid Trust and IRB InvIT, each trading on BSE and NSE because 2017.
Issue priced at Rs 99-one hundred per unit
The InvIT is sponsored by Maharatna PSU, Power Grid Corporation of India, a Sensex listed firm. The trust will be raising Rs 7,735 crore by way of the situation, of which Rs 4,993 crore will be a fresh situation even though the remaining Rs 2,741 crore will be an OFS. Units of PowerGrid InvIT will be sold in a value band of Rs 99-one hundred per unit, in a bid lot of 1,one hundred units per lot. This would translate to a minimum investment of Rs 1.1 lakh per investor. The situation has been reserved 75% for institutional investors and the remaining 25% for non-institutional investors.
The Initial Portfolio Assets of PowerGrid InvIT comprises 5 energy transmission projects positioned across 5 states of India. 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. PowerGrid InvIT has been offered a credit rating of AAA/Stable by domestic rating agencies ICRA, CARE Ratings, and CRISIL Ratings.
Consistent money flows, 90% payouts
“The transmission charges being contracted for 35 years result in minimal price risk arising from transmission charge resetting, which provides stability, consistent cash flows and long term visibility,” Axis Securities mentioned in a note. Meanwhile, analysts at Choice Broking think that apart from constant and steady money flows from assets with lengthy term visibility, low counterparty dangers, powerful monetary position, and government backing for PowerGrid InvIT are some of the positives to look at. Investors can also look forward to wholesome payouts in InvITs. PowerGrid InvIT intends to distribute at least 90% of the net out there money to the unitholders as soon as at least every single quarter in every single monetary year.
The supply is priced at about a 3.5x several on the book worth, according to GEPL Capital mentioned in a note. “Investors can expect a pre-tax yield of 9 to 11% based on the utilization of funds to repay the SPV level debt,” they added. However, PGInvIT has not disclosed the NAV, therefore the valuation and its benchmarking with the listed peer can not be ascertained, analysts at Choice Broking mentioned even though pinning a ‘Subscribe with a long term view’ rating on the InvIT IPO. Similarly, GEPL Capital is advising investors to subscribe to the situation.
IRB Trust InvIT and India Grid Trust InvIT, the currently listed related assets have taken divergent paths. While IRB Trust is trading at Rs 54.5 per unit, down 44% from its situation value, IndiGrid Trust InvIT is quoting a value of Rs 128 per unit, up from its situation value of Rs one hundred per unit.