KKR a private equity firm withdraws its intention to sponsor India Grid Trust, an infrastructural investment trust(InvIT).
In May 2019, KKR- in a first of its kind transaction- had invested Rs 1,084 crore in the InvIT set up by sterlite ower Transmission. GIC Infra Holdings had chipped in Rs 980 crore. According to the deal, Esoteric II Pte affiliated to KKR got 23% units of the trust with as option to buy a further 15% by July this year.
Addressing the situation, the IndiGrid said in a disclosure to the bourses that KKR has not purchased the additional stake before the agreement upon deadline. IndiGrid CEO Harsh Shah told that ” KKR has withdrawn its intention to sponser to IndiGrid. In its opinion a sponsor has right to acquire more than 25% units, which meant that If IndiGrid went for Capital raising, there would have been a large financial investor to put, say 50% of the money; capital is far more secure. now its needed far more people to invest.”
In the InvIT, KKR continues to be single largest unit holder and owns a mejority stake of 60% in Sterlite Investment Managers, the manager of the trust.
We are grappling with what will be the impact of this. Right now, we don’t need money because we are already capitalised from the last fundraising,” Shah said.
The company is calculating the impact on growth plans from KKR’s withdrawal. In Shah opinion ” KKR is still the manager to the trust and people see them as a good money manager. So, getting investors should not be challange. We will only have to go to a larger number of investors to raise the funds, that’s the impact.”
IndiGrid was the first InvIT in the Indian power sector which was established by sterlite Power to house its operational projects. It have nine operating projects consisting of 20 transmission lines with more than 5,800 circuit kms length and four substations. The assets under management are worth of Rs 12,200 crore.
Experts are of opinion that the unexpected termination of agreement will not affect the business given IndiGrid’s robust portfolio.
The brokerage Edelweiss said in note that ” The uncertainity around the shareholding pattern and sterlite ower Grid Ventures’ 100% pledge of its 15% stake is likely to create pressure on the stock. We remain comfertable with demand/volume at minimal risk, visible and predictable cash flows and solid track record.
