US private equity investor KKR and Singapore’s sovereign wealth fund GIC have invested Rs 1084 crore (US$ 157 million) and Rs 980 crore (US$142 million), respectively, to collectively own 42% stake in power infrastructure investment trust IndiGrid (India Grid Trust or the InvIT). IndiGrid was set up by Sterlite Power to own inter-state power transmission assets in India.
KKR has also applied to become a sponsor of IndiGrid and plans to acquire an additional 15% of IndiGrid’s total units from Sterlite Power. Following the closing of the transactions, KKR and GIC will collectively own approximately 57% of IndiGrid’s outstanding units.
In a separate transaction, KKR will additionally acquire a majority shareholding in Sterlite Investment Managers Limited—the investment manager owned by Sterlite Power. Sterlite Power, which established IndiGrid in 2016, will remain a sponsor and project manager of IndiGrid.
The transactions mark KKR’s first investment through its Asia Pacific infrastructure strategy.
Commenting on the deal, David Luboff, member and head of Asia Pacific Infrastructure at KKR, said, “Asia Pacific is a core focus for KKR’s global infrastructure strategy, and India is a key market for us in the region given its dynamism, the scale of investment opportunities and its crucial need for capital solutions. We’re pleased to have chosen leading infrastructure providers like IndiGrid and Sterlite Power as our first investment behind our Asia Infrastructure strategy, and look forward to supporting IndiGrid’s growth, providing further solutions-oriented opportunities and playing an important role in addressing the infrastructure need.”
With the capital infusion, IndiGrid will purchase five electricity transmission assets worth Rs 11,500 crores (US$1.66 billion) from Sterlite Power. A share purchase agreement for the two operational transmission assets has been signed, while three additional assets will be purchased once they become operational.
Following the completion of the proposed acquisitions, IndiGrid’s assets under management (AUM) will rise to Rs 17,000 crore (US$2.5 billion).
Harsh Shah, CEO of IndiGrid, said, “We look forward to benefiting from KKR and Sterlite Power’s expertise and experience in investment and asset management. With this new capital investment, we will reach our goal of Rs 17,000 crore of assets under management and are well on our way to achieving Rs 30,000 crore of assets under management by 2022 while also providing stable and predictable returns to our investors.”
The InvIT currently manages a portfolio of six electricity transmission assets with a total network of power transmission lines that span more than 3,361 circuit kilometres across nine Indian states. The purchase of Sterlite Power’s electricity transmission assets will significantly expand IndiGrid’s portfolio and better enable it to address India’s infrastructure needs.
Highlighting the importance of infrastructure investment in clean energy revolution, Pratik Agarwal, group CEO of Sterlite Power, said, “We believe now is the optimal time to invest in electricity transmission assets because the global clean energy revolution has created unprecedented demand for new transmission infrastructure. Our ability to grow the IndiGrid platform comes at a valuable time, and this opportunity further enables Sterlite Power to focus on its core skillset of developing greenfield assets in India, Brazil and beyond.”