NEW DELHI
:
Investment firms including Norway’s state-owned investment fund Norfund and German development finance institution DEG are eyeing a stake in KKR & Co.-backed India Grid Trust’s (IndiGrid) new power transmission platform in a deal expected to have an equity value of about $250 million.
British International Investment Plc., Beijing-headquartered Asian Infrastructure Investment Bank (AIIB), and Switzerland’s responsAbility Investments AG are also looking to invest in the new platform from India’s first listed power-sector infrastructure investment trust, said two people aware of the development.
IndiGrid’s new electricity transmission platform will help India’s ambitions to increase its renewable energy capacity and reduce its dependence on coal for power generation.
Infrastructure investment trusts, or InvITs, manage income-generating infrastructure assets, typically offering investors a regular yield and a liquid method of investing in infrastructure projects.
“The talks are at a very initial stage with the percentage of stake sale yet to be decided. The development expertise will be housed within IndiGrid,” said one of the people cited above, requesting anonymity.
Avendus Capital is running the fundraise for IndiGrid.
IndiGrid manages assets worth about $3.4 billion and also owns 41 power projects comprising 49 transmission lines, 15 substations, and 1.1 GW of solar power-generation capacity.
Spokespersons for KKR, IndiGrid, and British International Investment declined comment.
A DEG spokesperson in an emailed response said, “For reasons of confidentiality, we cannot comment on any business activities in individual cases.”
A Norfund spokesperson said the company doesn’t comment on “market speculation” while Avendus Capital said it does not “comment on stories of this nature”.
Queries emailed to the spokespersons of Asian Infrastructure Investment Bank on Friday afternoon, and responsAbility Investments A.G. on Monday afternoon remained unanswered.
A link for India’s green thrust
India aims to increase its renewable energy capacity to 500 GW by 2030, adding 50 GW of green energy capacity annually.
The country currently has an installed renewable energy capacity of 180.79 GW, including 73.31 GW of solar and 44.73 GW of wind-power capacity, out of a total power capacity of 444.75 GW.
The additional renewable energy capacity generated from solar and wind farms will need an adequate electricity transmission network to connect to the national power grid.
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“To cater to the continued significant growth in renewable energy, India’s electricity grids—transmission and distribution infrastructure—will require a significant amount of investment,” Moody’s Ratings said in a 6 June report.
“This investment would lead to optimal integration of renewable energy with the demand centers. Insufficient transmission capacity or congestion would increase the risk of renewable energy curtailment, which could significantly impact the cash flow of projects and have implications for future investments in the sector,” it added.
A familiar space
None of the potential investors in IndiGrid’s new power transmission platform are new to India’s green-energy space.
Norfund in August last year invested ₹350 crore in Bengaluru-based Fourth Partner Energy, following up on its $100-million investment in the company in June 2021.
British International Investment is a shareholder in Ayana Renewable Power, which is looking to sell a majority stake in its green-energy company.
AIIB is among investors eyeing a 49% stake in Gurgaon-based Hygenco Green Energies Pvt. Ltd for an estimated equity value of around $400 million, as Mint reported in June.
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