Public sector ‘Maharatna’ unit Powergrid India is all set to roll out its InvIT IPO on April 29, 2021. Let’s now check all the necessary details associated with the offer that is creating a buzz in the market.
Power Grid is set to become the first PSU to launch an InvIT IPO in the country. An InvIT IPO is more like a mutual fund scheme that invests the pool of funds in infrastructure projects in creating a parallel source of steady income for investors. Power Grid India is the third company to launch InvIT. Earlier, two private sector units, IRB Infra InvIT, backed by the GIC affiliates and infrastructure firm, and IndiGrid InvIT, backed by Sterlite Powergrid Ventures and KKR, had launched InvIT IPOs in the Indian market. At the beginning of April, analysts had said that they expect more REIT and InvIT IPOs to float into the market in the current fiscal under a unique initiative from the government to make these investments more attractive to investors.
The offer is witnessing strong interest from investors, including global pension funds, international long-only funds, mutual fund companies, and prominent insurance corporations, seeking stable long term income from investment.
The PSU is a critical player in the Indian power generation and transmission sector. It is also one of the largest transmission utilities in the world, engaged in the planning, development, and coordination of intrastate power transmission. The company has diversified into providing consultancy and telecom service to domestic and international clients in over twenty-one countries.
The Powergrid India Invit IPO date is decided on April 29, 2021, and the bidding window will remain open till May 3, 2021. Interested investors need to bid for a minimum of 1,100 shares or one lot, with an option to increase their bidding size in multiples of 1,100 thereafter. Approximately 75 percent of the offered size has been reserved for qualified investors when non-institutional investors get to bid for 25 percent.
The InvIT will invest in infrastructure projects – to own, construct, operate, maintain, and finance as an infrastructure investment trust as per InvIT Regulations concerning power transmission assets in India.
The PowerGrid InvIT’s Initial Portfolio Assets includes five power transmission projects in five states of India. The five projects contain 11 transmission lines, including six 765 kV transmission lines and five 400 kV transmission lines, with a total circuit length crossing approximately 3,698.59 ckm. The trust also has three operating substations with an aggregate transformation capacity of 6,630 MVA and optical ground wire covering 1,955.66 km.
ICICI Securities, Axis Capital, Edelweiss Financial Services, and HSBC Securities and Capital Markets (India) are appointed the book-running lead managers and KFin Technologies Pvt. Ltd. will function as the registrar.
The issue size of Rs 7,734.99 crores comprises both fresh scrips and OFS shares of Rs 4,993.48 crore and Rs 2,741.50 crore, respectively, and the shares will launch in the price band of Rs 99-100.
Post Powergrid news, its listed peer, IRB InvIT, is trading at a price of Rs 54.9, down by 45 percent from their issue price. On the other hand, IndiGrid InvIT IPO is quoting a price of Rs 128, higher than its issue price of Rs 100.
InvIT shares create a source of income for investors by paying a regular dividend while preserving the base capital. Currently, IRB InvIT is offering a pre-tax annual distribution yield of approximately 21%, and for IndiGrid, the same is close to 8.1 percent.