India Grid Trust completes acquisition of its first solar asset from FRV at Rs660cr

IndiGrid’s acquisition of its first solar asset is an important milestone in the Indian infrastructure sector as this marks the first renewable energy acquisition by any InvIT in the country.

Jul 14, 2021 03:07 IST India Infoline News Service

India Grid Trust announced on Wednesday that the company has completed the acquisition of a 100% stake in two solar assets with a cumulative capacity of 100 MW (AC) from Fotowatio Renewable Ventures (FRV) at an enterprise value of Rs660cr.

With this acquisition, our asset portfolio will now consist of 14 diversified power projects consisting of 40 transmission lines (~7,570 ckms), 11 substations (~13,550 MVA capacity) and 100 MW of solar power plants across 18 states and one Union Territory.

IndiGrid’s acquisition of its first solar asset is an important milestone in the Indian infrastructure sector as this marks the first renewable energy acquisition by any InvIT in the country.

Harsh Shah, Chief Executive Officer of IndiGrid, said “We are excited to diversify our portfolio and add the first set of solar assets. This acquisition is DPU accretive and would result in healthy addition to our net distributable cash flow. While power transmission assets remain at the core of IndiGrid’s growth strategy, we believe such attractive opportunities to acquire good quality solar projects ties in well with our strategy of providing predictable cash flows to our investors and reinforces our commitment to be a socially responsible organization.”

As per the regulatory filing, the 100 MW assets are fully operational and located in a high radiation zone in the 400 MW Ananthapuramu Solar Park in Andhra Pradesh with a contractual period of 25 years at a fixed tariff. Power Purchase Agreement for both assets is already in place with Solar Energy Corporation of India (“SECI”) a limited liability company owned 100% by the Government of India, as the counterparty. These superior quality projects use Tier I equipment and are eligible to receive a fixed tariff per unit of electricity generated thus limiting the operational risk. The projects have been operational for over 2 years and have a robust track record of generating and collections since inception.

The transaction is in line with IndiGrid’s strategy to acquire solar projects with long term power purchase agreements, operational track record and financially strong counterparties / off-takers such as SECI and NTPC. In addition to long contract life and low-risk cash flows, this asset complements IndiGrid’s transmission portfolio with synergies on operations and regulatory establishments. The acquisition will be funded through a combination of debt, internal accruals and recent Rights Issues. The net debt/AUM stands around 58% post this acquisition, providing adequate headroom for growth against the 70% leverage threshold as per SEBI InvIT Regulations.

Cyril Amarchand and Mangaldas, PriceWater Coopers and Mahindra Teqo advised IndiGrid on this transaction. Greenstone Advisors acted as the sell-side advisor on the transaction representing FRV.

At around 3.29 pm, India Grid was trading at Rs135.70 per piece up by 0.7% on Sensex. 

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