IndiGrid to Buy NER-II Transmission from Sterlite Power for about Rs 46.25 Bn

India Grid Trust (IndiGrid), India’s first power infrastructure investment trust (InvIT), signed a share purchase agreement with Sterlite Power to buy NER-II Transmission Ltd (NER-II) for about Rs 46.25 billion, subject to closing adjustments.

March 06, 2021. By Manu Tayal

India Grid Trust (IndiGrid), India’s first power infrastructure investment trust (InvIT), signed a share purchase agreement with Sterlite Power to buy NER-II Transmission Ltd (NER-II) for about Rs 46.25 billion, subject to closing adjustments.

The deal has been part of the framework agreement signed by IndiGrid with Sterlite Power in April 2019 for acquisition of NER-II upon commissioning.

The acquisition is expected to boost IndiGrid’s Assets Under Management (AUM) by 34 per cent to over Rs 200 billion (USD 2.8 Bn).

Post completion, the platform’s asset portfolio would consist of 13 power transmission projects, with a total network of 38 power transmission lines and 11 substations extending over ~7,570 circuit kilometers and 13,350 MVA in 17 Indian states and 1 Union Territory.

Commenting on the acquisition, Harsh Shah, Chief Executive Officer of IndiGrid, said, “we are excited with acquisition of NER-II which is one of the largest acquisitions in Indian power transmission sector in India. NER-II fits well with our strategy of focusing on operating assets with long term cash flows and minimal counter party risk. This acquisition would be DPU accretive and augment our recent increase of DPU to Rs 12.40 per annum for a considerable period. With a robust acquisition pipeline and support from our sponsors, IndiGrid is well positioned to execute its plans for providing stable and growing DPU while maintaining a robust balance sheet.”

This transaction is expected to be consummated during Q4 FY21, subject to unitholders’ approval, regulatory approvals, and other customary closing adjustments.

“We are delighted to sign the Share Purchase Agreement with IndiGrid for our mega NER-II project at a transaction value of Rs 46.25 Bn subject to closing adjustments. The acquisition of NER-II was envisaged as part of the framework agreement signed with IndiGrid in April 2019. This mega transmission project will help to deliver reliable power for 5.3 crore people in India’s north eastern region,” said Pratik Agarwal, Managing Director, Sterlite Power.

The acquisition will be funded through a combination of internal accruals, debt, equity proceeds from the preference issue done in May 2019 and forthcoming rights issue. Post this acquisition, the net debt/AUM would stand at ~64 per cent.

Meanwhile, NER-II is part of Inter State Transmission Scheme (ISTS) network, and was awarded on a Build, Own, Operate, Maintain (BOOM) basis for 35 years.

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