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India Grid Trust, the Asian nation’s first power transmission infrastructure trust, is aiming for an eight-fold increase in assets to Rs30,000 crore ($4.7 billion) within five years to fetch higher returns for investors .
To start with, the trust plans to acquire four more assets this financial year from its sponsor Sterlite Power Grid Ventures Ltd., the country’s largest private power transmission projects operator. These four projects have annual revenues of about Rs300 crore and can boost the trust’s revenues by 50-60%, said Pratik Agarwal, chief executive officer of India Grid Trust.
The plan to increase assets under management “will require a combination of sponsor assets and third-party acquisitions,” Agarwal said in a phone interview. The trust currently holds two interstate high voltage power transmission lines worth Rs3,700 crore.
After 10 years in the planning, a slice of India’s public works was made available this year to investors in the form of infrastructure investment trusts — hybrid securities promising double-digit yields. After a lukewarm debut on the nation’s stock exchanges, an increase in India Grid Trust’s asset portfolio will help it boost returns for investors who have yet to see its units trade above the listing price.
The units changed hands at Rs95.95 on Wednesday in Mumbai, below the listing price of Rs100 per unit.
“These are very early days and we should be patient,” Agarwal said. “Perhaps by the end of the financial year, there will be a very healthy and robust market for this product.”
The trust’s investment committee will meet within two months to decide on the acquisition of the four transmission projects, which will be funded mainly through debt, Agarwal said. These assets are expected to increase the annual payout to investors by 3% to 5%, he said.
The trust announced its first payout, known as distribution per unit, of 92 paise on Wednesday, and indicated an annual payment of about Rs11 a unit. It has also increased the frequency of these payouts to every quarter from semi-annual earlier. Bloomberg
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