Sterlite Transmission and Singapore's GIC form a $1 billion joint venture

25 Oct 2023 , 12:51 PM

In order to meet the rising demand for power evacuation networks in the nation as a result of the renewable energy boom, Sterlite Power Transmission (SPTL), a privately held Vedanta Group company, is partnering with Singapore’s sovereign wealth fund, GIC, to create a $1 billion joint venture platform, multiple people with knowledge of the plans told ET.

Right now, SPTL is in the process of demerging into two companies. The infrastructure division, which creates and manages power transmission assets on a build-operate-transfer (BOT) basis and often through 30-year concessionaire agreements, will be housed in one section.

The domestic manufacturing of cables, conductors, and optical phase ground wires will be located in the other business.

Third-party buyers, such as state transmission utilities, will receive this on a turnkey basis. This division has 108 key corridors spread across 15 states and about 34,000 km of optical phase ground wires-based connectivity projects completed or in progress.

GIC will invest $500 million for a 49% stake in the infrastructure industry. With an initial $100 million and $400 million coming in over the following two to three years on a need-to-draw-down basis, the investment will be made in stages. This will depend on Sterlite Power’s anticipated capex and ability to win transmission project bids.

In order to try and capture a larger piece of the market, which, according to industry estimates, has seen yearly cumulative projects worth Rs 10,000-12,000 crore bid out every year between 2010 and 22; GIC’s objective is to be the exclusive partner of Sterlite in India in the transmission segment.

Additionally, there is a promise to use funds that goes above and beyond the initial allocation of $500 million. 

Sterlite Power would transfer four assets valued at Rs 6,000 crore ($722.60 million) into this JV in the meantime. Additionally, during a comparable two-to-three-year period, the corporation is anticipated to invest between Rs 1,700 and Rs 2,500 crore (up to $300 million) in cash and use its resources to preserve its 51% interest in the alliance.

One each in Assam and Kashmir, two of the assets are located there. With three substations and a transmission capacity of 800-2000 MW, they have a combined length of 700 km.

According to one of the executives in the know, who spoke on the condition of anonymity since the discussions are secret, ‘With these four seed assets, the plan is to aggressively bid and build more.’ ‘GIC is a constant source of funding and has high hopes for the Indian infrastructure market. In concession projects, SPTL has consistently maintained a 25% market share and seeks to expand.

‘Transmission is a scale game, and the size and tenure of a patient capital provider like GIC is key,’ stated the official. ‘They have developed comparable platforms with Greenko in terms of renewable energy and IRB in terms of roads. Therefore, they are also familiar with this area.

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