State-run electricity transmission utility Power Grid Corporation of India (PGCIL) on Wednesday (27 January) filed a draft red herring prospectus (DRHP) with the Security and Exchange Board of India (SEBI) seeking to monetise some of its assets via the InvIT ( infrastructure investment trust) route, reports Moneycontrol.
This is the first time a Public Sector Undertaking (PSU) in the power sector will monetise its assets through the InvIT model and use the proceeds to fund new and under-construction capital projects. Around Rs 8,000 crore would be raised in this exercise.
“This is a public InvIT and will help Power Grid to unlock value and secure funds for fresh investment in transmission network expansion. It will also help to reduce debt from the listed company’s books and transfer it to the InvIT. The InvIT will then raise fresh capital in the IPO and trim the debt," people familiar with the matter told Moneycontrol.
It is reported that some pension funds and sovereign funds have expressed strong interest in the deal and the money from the InvIT will go to the listed company Power Grid.
In September 2020, the Cabinet Committee on Economic Affairs chaired by Prime Minister Modi has approved monetization of assets of PGCIL, a PSU under Ministry of Power, through InvIT model.
PGCIL is a public limited company, started its commercial operation in the year 1992-93 and is today, a Maharatna company, engaged in the business of power transmission.
The Company, along with its wholly owned subsidiaries acquired through the Tariff Based Competitive Bidding (TBCB) process, owns and operates a pan India transmission network.
Company meets its fund requirement for its Capital Expenditure (CAPEX) through its internal accruals and debt.
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