IndiGrid acquires 100 MW solar assets from FRV for Rs 660 crore

Infrastructure investment trust IndiGrid said it has completed the acquisition of entire stake in two solar energy assets from FRV at an enterprise value of Rs 660 crore

Infrastructure investment trust IndiGrid on Wednesday said it has completed the acquisition of entire stake in two solar energy assets with cumulative capacity of 100 MW from Fotowatio Renewable Ventures (FRV) at an enterprise value of Rs 660 crore.

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.

"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) a limited liability company owned 100 per cent by the Government of India, as the counterparty.

These projects use Tier I equipment and are eligible to receive a fixed tariff on per unit of electricity generated thus limiting the operational risk. The projects have been operational for over two years and have a robust track record of generation and collections since inception.

This transaction is in line with IndiGrid's strategy to acquire solar projects with long term power purchase agreements, operational track record and financially strong counterparties / off-takers such as SECI and NTPC.

In addition to long contract life and low-risk cash flows, this asset complements IndiGrid's transmission portfolio with synergies on operations and regulatory establishments. 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."

Cyril Amarchand and Mangaldas, PriceWater Coopers and Mahindra Teqo advised IndiGrid on this transaction. Greenstone Advisors acted as the sell-side advisor on the transaction representing FRV.

IndiGrid owns 14 operating power projects consisting of 40 transmission lines with more than 7,570 ckms (circuit kilometers) length, 11 substations with 13,550 MVA transformation capacity and 100 MW of solar generation capacity.

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.