State-run electricity transmission company Power Grid has made an application with the SEBI for monetization of its assets and raising around Rs. 8000 crore (that amounts to more than billion dollars) through the InvIT route. The plan if successful will enable the government amass funds at a time when the centre is already short in its divestment target for FY21 of Rs. 2.1 trillion.
"This is a public InvIT and will help Power Grid to unlock value and secure funds for fresh investment in transmission network expansion. It will also help to reduce debt from the listed company's books and transfer it to the InvIT. The InvIT will then raise fresh capital in the IPO and trim the debt," one of the individuals familiar with the development told a leading online business portal.
"A clutch of pension funds and sovereign funds has expressed strong interest in the deal. The money from the InvIT will go to the listed company Power Grid and the firm can then decide what to do with the IPO proceeds and give dividend," said the source to the same publication.
"ICICI Securities, Axis Capital, Edelweiss and HSBC Securities are the investment bankers working on this proposed InvIT, which is likely to be launched in March 2021," a third individual told Moneycontrol.
It was in late September that the CCEA gave nod to the monetisation of assets of Power Grid that falls within the ambit of Ministry of Power, through the Infrastructure Investment Trust (InvIT) model.
"This approval would help Power Grid to monetise in the first lot, assets with gross block value of more than Rs 7,000 crore. These assets, which are mainly High Voltage Transmission lines and substations, are held by Power Grid in form of Special Purpose Vehicles (SPVs). The proceeds from the asset monetization would be deployed by Power Grid in their new and under-construction projects," the government had shared in an official statement.
In Budget 2019-20, there was a proposal made to launch new financial products such as InvITs as part of the brown field asset monetization strategy for augmenting infrastructure investment.