It’s IPO call for the PSU power ‘Maharatna’, Powergrid Corporation of India, which prepares to go public on April 29, 2021. The proposed IPO size of Rs 7,734,99 crores contains prime components worth Rs 4,500 crores. The rest of Rs 2,741.50 crore is OFS units.
Powergrid Corporation of India Limited is a PSU that belongs to schedule ‘A’ ‘Maharatna’ companies. The company was incorporated in 1989 under the Companies Act of 1956. The government of India is the primary stakeholder in the company with 51.34 percent, while the rest is split between public and institutional investors.
The PSU is a critical player in India’s power distribution system, primarily engaged in the planning, developing, and coordinating interstate power distribution and transmission. Being one of the biggest transmission units in the world, the company aims to provide uninterrupted power deployment across the nation with 99 percent efficacy. They are a strategic PSU crucial for India’s power deployment.
What is an InvIT IPO?
It is the first time for a PSU to issue an InvIT IPO.
InvIT IPO is different from regular IPO shares. It is more like a mutual fund scheme. It is a form of collective investment from individual and institutional investors in which the company invests the funds directly into infrastructure projects to generate a small income for investors.
Powergrid Corporation will be the third company (and first among public sector units) to launch InvIT. The market has witnessed two InvIT from the private sector before, IRB Infra InvIT and IndiGrid InvIT.
Power Grid India InvIT will function as an investment trust with a focus to own, construct, operate, maintain, and invest in infrastructure permissible under InvIT Regulation, including power transmission in India. They will work as the project manager of the InvIT.
Regarding Power Grid India IPO
Before the offer opens for subscription, let’s look at the highlights of the InvIT IPO.
- The total size of the IPO is said to be huge at Rs 7,734,99 crores, consisting of primary component worth Rs 4,500 crores and the rest in secondary issues.
- The bidding window will stay open from April 29 until May 3, 2021.
- Anchor investors’ bidding will begin on April 28, 2021.
- Not more than 75 percent of the total IPO size is reserved for qualified institutional buyers. A 25 percent goes to non-institutional investors.
- The shares will launch in the price band of Rs 99-100. Investors may apply for a minimum of one lot of 1,100 shares and increase their bidding size in multiple of the minimum lot size after that.
- The shares will debut in both BSE and NSE.
- ICICI Securities, Axis Capital, Edelweiss Financial Services, and HSBC Securities and Capital Markets (India) are the investment banks working as book-running managers for the offer, whereas KFin Technologies Pvt. Ltd. acting as the registrar
- The tentative date for the finalisation of Power Grid India IPO shares is May 10, 2021, and the shares will list in the exchange on May 17, 2021
The Power Grid India is a critical player in India’s power development, transmission, and deployment. Despite the rising cases of COVID-19 in the country, the power grid section remained well insulated in the crisis and registered strong growth in the troubled time. It has prompted the market to maintain a positive outlook towards the InvIT.