India Grid to raise Rs 2,500 cr via NCD to recast debt, acquisitions
KKR-backed India Grid Trust (IndiGrid) is raising a term loan of Rs 1,500 crore, and debts of Rs 1,000 crore through non-convertible debentures (NCD) to refinance old loans and acquire power transmission assets.
IndiGrid’s debt on February 28, 2021, was Rs 8,690 crore.
One of its units — East North Interconnection Company (ENICL) — has a term loan of Rs 630 crore and another entity — Gurgaon-Palwal Transmission (GPTL) —carries debts of Rs 739 crore.
The proceeds of NCDs and credit will refinance the loans of ENICL and GPTL.
The major shareholders in IndiGrid are KKR & Co. Inc and its affiliates (23 per cent) and Singapore’s GIC and its affiliates (20 per cent). The unitholders of IndiGrid in September 2020 granted approval for designating KKR sponsor.
India Ratings has assigned “AAA” for the proposed debenture offer. It also affirmed the current rating for bank loans and long-term debts.
The affirmation reflects the stable operations of IndiGrid’s asset portfolio till December 2020 and the availability of adequate liquidity to address temporary cash flow mismatches. The collection ratio in April-December 2020 was 95 per cent, the rating agency said.
On March 5, 2021, IndiGrid signed a share-purchase agreement to acquire NER-II Transmission (NERTL) at Rs 4,625 crore. NERTL is an interstate transmission asset with a tariff visibility for 35 years. The acquisition is in line with IndiGrid’s plan to acquire it and Khargone Transmission (to be acquired by FY22) from Sterlite Power Transmission.
IndiGrid has announced acquiring two solar assets —Andhra Pradesh Solar Farm-I and India Solar Park II — of 50 Mw each. Approval is awaited. Both are located in the Ananthapuramu solar park in Andhra Pradesh and have Solar Energy Corporation of India (SECI) as counterparty.
SECI has been making tariff payments regularly. It has shown stable operating performance in the current financial year. Its revenues stood at Rs 1,200.1 crore for nine months ended December 2020. For 2019-20 revenues were at Rs 1,278.6 crore as against Rs 673.9 crore in 2018-19.
IndiGrid had a collection ratio (revenue received/bill raised for the period) of 95 per cent in April-December 2020.
Revenue from transmission assets has a higher certainty and lower dependence on regulatory intervention than other power sector assets. Tariff recovery for transmission assets is unaffected by the power flow, the rating agency said.
Apart from the easing of lockdown, the liquidity scheme of lending Rs 1.2 trillion to distribution utilities may aid in improving collection in FY21, India Ratings said.
There is a concentration of conventional energy generation and renewable energy output in specific regions of the country.
In this backdrop, transmission networks play an integral role in transferring power to demand centres and will remain critical in the power supply value chain. Transmission assets use standard technology and their lifecycle costs are lower than those for other infrastructure assets.
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