India Grid Trust lists at discount

India Grid Trust, an infrastructure investment trust (InvIT) sponsored by Sterlite Power Grid Ventures, made its entry on the stock exchanges today.  It was expected to list at a discount and it did – as against the IPO price of Rs.100, it got listed on the BSE at exactly the same price of Rs.100 to slip immediately and on the NSE, it got listed at a discount – at Rs.99.70.

The IPO had got a lukewarm response when it opened for subscription; it was subscribed just 1.17 times.

IndiGrid InvIT is a Special Purpose Vehicle (SPV) established in Oct 2016 to acquire 2 inter-state revenue-generating power transmission assets, Bhopal Dhule Transmission Company Ltd (BDTCL) and Jabalpur Transmission Company Ltd (JTCL), comprising 8 power transmission lines of 1,936 circuit kms and two substations of 6,000 MVA transformation capacity across 4 states, from its sponsor, Sterlite Power Grid Ventures Limited, a leading independent power transmission company with 29% market share in Tariff Based Competitive Bidding (TBCB) system, and owned 72% by Sterlite Power Transmission Ltd and 28% by Standard Chartered Private Equity.

In our IPO Analysis, we had said, “InvIT is quasi-debt mixed with some equity risk. However holding period for computation of capital gain, at 3 years, is similar to debt instruments vis-a-vis listed equity qualifying for long term capital gain at 1 year. Since InvITs are structurally designed to suit institutional investors or ultra HNIs, looking to maximise gains from fixed return instruments, one can consider this issue with a long term horizon.”