Photographer: Dhiraj Singh/Bloomberg

India Grid Plans Eight-Fold Rise in Transmission Assets by 2022

  • Trust to buy 4 transmission assets from sponsor by March
  • Still early days for infrastructure investment trusts: Agarwal

India Grid Trust, the Asian nation’s first power transmission infrastructure trust, is aiming for an eight-fold increase in assets to 300 billion rupees ($4.7 billion) within five years to fetch higher returns for investors.

To start with, the trust plans to acquire four more assets this financial year from its sponsor Sterlite Power Grid Ventures Ltd., the country’s largest private power transmission projects operator. These four projects have annual revenues of about 3 billion rupees and can boost the trust’s revenues by 50-60 percent, said Pratik Agarwal, chief executive officer of India Grid Trust.

The plan to increase assets under management “will require a combination of sponsor assets and third-party acquisitions,” Agarwal said in a phone interview. The trust currently holds two interstate high voltage power transmission lines worth 37 billion rupees.

After 10 years in the planning, a slice of India’s public works was made available this year to investors in the form of infrastructure investment trusts -- hybrid securities promising double-digit yields. After a lukewarm debut on the nation’s stock exchanges, an increase in India Grid Trust’s asset portfolio will help it boost returns for investors who have yet to see its units trade above the listing price.

The units changed hands at 95.95 rupees on Wednesday in Mumbai, below the listing price of 100 rupees per unit.

“These are very early days and we should be patient,” Agarwal said. “Perhaps by the end of the financial year, there will be a very healthy and robust market for this product.”

The trust’s investment committee will meet within two months to decide on the acquisition of the four transmission projects, which will be funded mainly through debt, Agarwal said. These assets are expected to increase the annual payout to investors by 3 percent to 5 percent, he said.

The trust announced its first payout, known as distribution per unit, of 92 paise on Wednesday, and indicated an annual payment of about 11 rupees a unit. It has also increased the frequency of these payouts to every quarter from semi-annual earlier.

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