IndiGrid announced on Wednesday that the infrastructure investment fund IndiGrid has completed the acquisition of the entire stake in two solar power plants with a cumulative capacity of 100 MW from Fotowatio Renewable Ventures (FRV) for an enterprise value of 660 billion rupees.
The acquisition of its first solar system by IndiGrid is an important milestone in the Indian infrastructure sector as it is the first acquisition of renewable energies by InvIT in the country, the company said in a statement.
India Grid Trust, India's first Power Infrastructure Investment Trust (InvIT), announced the completion of the acquisition of 100 percent of the shares in two solar plants with a cumulative capacity of 100 MW (AC) from Fotowatio Renewable Ventures (FRV) for an enterprise value of. known 6.6 billion rupees (660 billion rupees), ”it said.
With this takeover, the company's plant portfolio will now consist of 14 diversified electricity projects, consisting of 40 transmission lines (7,570 circuit kilometers), 11 substations (13,550 MVA capacity) and 100 MW solar power plants in 18 states and a Union territory.
The 100 MW systems are fully operational and are located in a high radiation zone in the 400 MW solar park Ananthapuramu in Andhra Pradesh with a contract term of 25 years at a fixed tariff.
Both plants already have power purchase agreements with the Solar Energy Corporation of India (SECI), a limited liability company wholly owned by the Indian government, as the counterparty.
These projects use Tier I equipment and are entitled to a fixed tariff per unit of electricity generated, which limits operational risk. The projects have been up and running for over two years and have had a solid track record of production and collections since their inception.
This transaction is in line with IndiGrid's strategy of acquiring solar projects with long-term power purchase agreements, operational track records and financially strong counterparties / buyers such as SECI and NTPC.
In addition to a long contract term and low-risk cash flows, this asset complements IndiGrid's transfer portfolio with synergies for operations and regulatory authorities. The acquisition will be financed through a combination of debt, internal provisions and proceeds from the most recent rights issue.
The net debt / AUM (assets under management) after this acquisition is around 58 percent and offers sufficient scope for growth compared to the 70 percent leverage threshold according to the SEBI InvIT Regulations.
Harsh Shah, CEO of IndiGrid, said: “This acquisition is DPU (Distribution Per Unit) value added and would be a healthy addition to our net distributable cash flow.
“While power transmission systems are at the heart of IndiGrid's growth strategy, we believe that such attractive opportunities to acquire high quality solar projects fit well with our strategy of providing predictable cash flows to our investors and strengthening our commitment as a socially responsible company. “
Cyril Amarchand and Mangaldas, PriceWater Coopers and Mahindra Teqo advised IndiGrid on this transaction. Greenstone Advisors acted as sell-side advisor to FRV on the transaction.
IndiGrid owns 14 operating power projects, consisting of 40 transmission lines with more than 7,570 ckm (switching kilometers) in length, 11 substations with 13,550 MVA conversion capacity and 100 MW solar generation capacity.
IndiGrid has assets under management (AUM) of over Rs 21,000 billion ($ 2.83 billion). The IndiGrid investment manager is majority owned by KKR