Mytrah Eyes First Infrastructure Fund Listing for Indian Powerby
Infrastructure investment trust, or InVit, eyed for expansion
Tabs $200 million for growth, $100 million for IDFC exit
Mytrah Energy Ltd. is weighing whether to become India’s first company to list an infrastructure investment trust, or InvIT, to help the wind-farm developer tap rising demand for green power.
Mytrah, traded on London’s Alternative Investment Market, may seek as much as $400 million by listing an InvIT, Chairman Ravi Kailas said in an interview. About half would be used to fund growth with part of the remaining funds tagged to allow early-stage investors to exit, he said.
“We’re most suitably positioned for it,” Kailas said. “We could do a combination of an initial public offering and private equity to raise capital but the other route that we’re looking at very closely is listing an InvIT at asset level.”
Interest in investment trusts has gained in India since the government of Prime Minister Narenda Modi decided that dividends distributed by the funds wouldn’t be subject to tax as of June 1. Modi wants to boost Indian infrastructure spending by about a quarter this year and raise installed renewable-energy capacity to 175 gigawatts by 2022.
Like with mutual funds, retail and institutional investors can subscribe to units of an InvIT, which could either be listed or unlisted, according to an e-mail from KPMG India Ltd. They’re designed to provide a steady stream of dividend income.
Mytrah currently has 920 megawatts of installed wind capacity with another 90 megawatts preparing to come online. Another 500 megawatts of solar power under development. In order to grow beyond 1.6 gigawatts, the company will need fresh capital, according to Kailas, who estimates India’s green energy market will add as much as 20 gigawatts of new capacity annually over the next few years.
“Given that renewable energy IPOs have been too far and few, InvITs can provide early-stage investors in Indian renewable energy platforms an alternate exit medium," said Bloomberg New Energy Finance analyst Ashish Sethia. The funds could boost the country’s plans to boost clean energy capacity to 175 gigawatts by 2022 from 45 gigawatts today, he said.
In addition to funding growth, Mytrah needs $100 million to refinance mezzanine investor IDFC Alternatives Ltd., Kailas said. IDFC, which provided 3.5 billion rupees ($52 million), wants to exit the investment and holds securities that only convert into equity shares in case of a Mytrah default, he said.