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India Grid Trust has announced the completion of the acquisition of 100 per cent stake in two solar assets with a cumulative capacity of 100 MW (AC) from Fotowatio Renewable Ventures (FRV) at an enterprise value of ₹660 crore. This marks the first renewable energy acquisition by any InvIT in the country.
With this acquisition, IndiGrid’s asset portfolio will now consist of 14 diversified power projects consisting of 40 transmission lines,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 Agreement for both assets are already in place with Solar Energy Corporation of India.
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“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,” said a press statement.
Funding plans
The acquisition will be funded through a combination of debt, internal accruals and proceeds of recent Rights Issue. The net debt/AUM 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.
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Commenting on the acquisition, Harsh Shah, Chief Executive Officer of IndiGrid, said “We are excited to diversify our portfolio and add the first set of solar assets. This acquisition is DPU accretive and will 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 tie in well with our strategy of providing predictable cash flows to our investors and reinforces our commitment to be a socially responsible organisation.”
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