Sterlite Power targets $10bn assets by 2022 fuelled by KKR funds

May 13 2019

Sterlite Power

The investment made by KKR in its infrastructure investment trust would play a crucial role in achieving it.

Mumbai: Sterlite Power Transmission aims to expand its global footprint in power transmission sector to a portfolio worth $10 billion in by 2021-22, and the investment made by KKR in its infrastructure investment trust would play a crucial role in achieving it, a top executive at the power transmission company told ET .

The company, which has presence in India and Brazil, aims to tap international capital to finance opportunities globally and to scale up the asset under management under parent Sterlite Power, as well as its InvIT, India Grid Trust (IndiGrid). 

“We aim to have asset under management of $10 billion under Sterlite Power and IndiGrid combined in the next few years — we are halfway there,” Pratik Agarwal, Group CEO of Sterlite Power, told ET. 

IndiGrid raised Rs 2,514 crore through a qualified institutional placement last week. This included an investment of Rs 1,084 crore by KKR and Rs 980 crore by GIC Infra Holdings Pte. This first of its kind transaction also makes KKR a cosponsor of IndiGrid and gives it controlling interest in Sterlite Investment Manager (SIM), which manages the trust. 

“This deal bolsters our zeal to go after markets we like as it provides us with an almost perpetual line of equity capital. Now we can monetise our assets more frequently,” Agarwal said. 

The deal may also set a precedent for the infrastructure sector as investors slowly warm up to InvIT, a relatively new instrument in the country that allows promoters of projects to sell their stake in completed projects to the trust, which in turn can raise long-term and tax-free funds from unit holders. 

“There is a dichotomy in the market: while there are investors with billions of dollars looking for safe operating assets, they don’t want to invest in greenfield assets. Most Indian and international infrastructure groups kept all assets — operational and under construction — together which meant not too many investors were interested,” he said. Given the constraints of promoter capital and bank loans, Agarwal said InvIt would be a good option for cash-strapped infrastructure sector. Subsequent to the recent investment, IndiGrid will acquire five more assets from Sterlite Power, taking assets under management to Rs 17,000 crore with an aim of Rs 30,000 crore by 2022. This would give Sterlite Power the financial flexibility to bid for new greenfield projects.

“We feel 2019-20 would be the beginning of aggressive spend in Indian transmission sector. This year we will see about Rs 20,000 crore of projects being awarded, which is twice that of last year. This can easily be doubled next year. We are geared up,” Agarwal said. The growth strategy will focus on the Indian subcontinent and Latin America. “India and Brazil together account for 70-80% of the global opportunity in power transmission concessions and will be the main markets for the next few years for us. We are exploring other markets which have the potential to grow but are small right now,” he said.

Read More: The Economic Times