Since a number of smaller EPC companies have invested in the transmission segment due to a dearth of EPC projects in the past. Now, with the government targeting at rural electrification, EPC players will look for more capital to take up such orders necessitating for these companies to exit from such assets and pursue new orders through the sale of transmission assets.
Industry experts feel that it may be a good time to sell transmission assets for the country’s power transmission sector as the segment is witnessing a huge buyer interest from transmission companies and yield-based investment firms. Though for buyers, it is still difficult to find assets, it is definitely seller’s markets who are leading the entire game.
Recently held deal in the country’s transmission sector is that of Infrastructure Investment Trust (InvIT) IndiGrid acquisition of 46 percent stake in Patran Transmission Co. Ltd (PTCL) from Techno Power Grid Co. Ltd, Techno Electric & Engineering Co. Ltd, and its nominee shareholders. The sum paid for the investment in PTCL is INR 232 crore.
Further, IndiGrid has also completed the acquisition of three transmission assets from its sponsor, Sterlite Power Grid Ventures Ltd, that include RAPP Transmission Co., Purulia and Kharagpur Transmission Co. and Maheshwaram Transmission (together known as MRP). The sum paid for the transmission assets from Sterlite Power Grid Ventures is INR 1,410 crore. The acquisition will be financed by an INR 1,000 crore 10-year loan and an INR 420 crore short-term loan, which would be refinanced at a later date.
IndiGrid is not a lone buyer in the transmission sector where only a few assets are up for sale. It is seen that yield-based investment firms are highly interested in such assets because these promise stable returns. According to media reports, Canada Pension Plan Investment Board (CPPIB) and IDFC Alternatives were some of the firms interested to pick a stake in power transmission assets. Recent deals also include Adani Transmission acquisition of Western Region Strengthening System assets from Reliance Infrastructure Limited (R-Infra) in November 2017.
Other deals on the card are CLP India Pvt. Ltd, one of the largest foreign investors in the Indian power sector, showing interest in acquiring Essel Infraprojects Ltd’s power transmission business at a potential valuation of around $1 billion. This makes it the second company—apart from Greenko Group, backed by Singapore’s sovereign wealth fund GIC Holdings Pte and the Abu Dhabi Investment Authority—to evince interest in acquiring these assets.