IndiGrid InvIT Completes Rs 660 crore Acquisition Of Fotowatio’s India Solar Assets

Highlights :

  • The investment marks the first solar generation assets to be part of an InvIT in India.
  • InvITs are widely expected to gain favour with developers looking to monetise their existing assets and free up debt capacity.

IndiGrid, the Infrastructure investment trust (InvIT) has announced  the formal acquisition of the entire stake in two solar energy assets with cumulative capacity of 100 MW from Spanish developer Fotowatio Renewable Ventures (FRV) at an enterprise value of Rs 660 crore. The firm had actually made a regulatory filing on these back in December 2020.

IndiGrid’s acquisition of its first solar asset is an important milestone in the Indian infrastructure sector as this marks the first renewable energy acquisition by any InvIT in the country, the company said in a statement. For IndiGrid, these are also the first generation assets in its portfolio, going beyond transmission and substations for the first time.

“India Grid Trust, India’s first power infrastructure investment trust (InvIT), announced the completion of acquisition of 100 per cent stake in two solar assets with cumulative capacity of 100 MW (AC) from Fotowatio Renewable Ventures (FRV) at an enterprise value of Rs 6.6 billion (Rs 660 crore),” it said.

With this acquisition, the company’s asset portfolio will now consist of 14 diversified power projects consisting of 40 transmission lines (7,570 circuit kilometers) ,11 substations (13,550 MVA capacity) and 100 MW of solar power plants across 18 states and one Union Territory.

The 100 MW assets are fully operational and located in a high radiation zone in the 400 MW Ananthapuramu Solar Park in Andhra Pradesh with a contractual period of 25 years at a fixed tariff.

Power purchase agreements for both assets are already in place with Solar Energy Corporation of India (SECI) .

The projects have been operational for over two years and have a robust track record of generation and collections since inception.

The acquisition will be funded through a combination of debt, internal accruals and proceeds of recent Rights Issue.

The net debt/AUM (assets under management) stands around 58 per cent post this acquisition, providing adequate headroom for growth against the 70 per cent leverage threshold as per SEBI InvIT Regulations.

Harsh Shah, CEO of IndiGrid, said, “This acquisition is DPU (distribution per unit) accretive and would result in healthy addition to our net distributable cash flow.

While power transmission assets remain at the core of IndiGrid’s growth strategy, we believe such attractive opportunities to acquire good quality solar projects ties in well with our strategy of providing predictable cash flows to our investors and reinforces our commitment to be a socially responsible organisation.”

IndiGrid has assets under management (AUM) of over Rs 21,000 crore (USD 2.83 billion). The investment manager of IndiGrid is majority owned by KKR.

About InvITs? 

InvITs  have emerged as a special investment option using infrastructure assets that seek to offer stable returns on the back of large, long gestation infra projects with fixed returns. Solar assets with long term PPA’sfit in well with this model. Firms like Tata Power have already announced plans to start their own InvITs soon. They provide infrastructure developers the much-needed platform to monetize their operating assets in order to free up debt capacity to undertaking more development projects. InvITs are seen as potential game changers for the Indian power sector which is facing severe stress. Readers will have heard more about REITS, similar to InvITS, except that REITS are based on commercial real estate assets and the cash flow from rentals.

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Prasanna Singh

Prasanna has been a media professional for over 20 years. He is the Group Editor of Saur Energy International

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