The Indian Stock Market is exploring new vehicles to fund infrastructure BOT (Build, Operate, Transfer). Inline with this, we have seen REITs (Real Estate Investment Trust) take off with a lot of fanfare and having performed decently since launch.
Brookfield manages assets in India and has performed pretty decently and provided dividends to shareholders on a regular basis.
On a similar note, Power Grid InvIT was launched as an infrastructure trust to pool assets meant to electrify the grid and maintain it over its lifetime.
The trust structure is as follows Power Grid Corporation of India Ltd.(PGCIL), a listed entity on the stock market has 5 assets under the InvIT.
These Assets have in place a long-term Transmission Service Agreement (TSA) of 35 years from the Scheduled Commercial Operation Date (COD) of the relevant Initial Portfolio Asset.
The Five Assets under the PGCIL InvIT that are located across five states of India can be given as follows:
- 11 transmission lines, including six 765 kV transmission lines and
- Five 400 kV transmission lines
- Three substations with 6,630 MVA of an aggregate transformation capacity and 1,955.66 km of optical ground wire
As the assets fall under the emerging hubs of development in India, the assets are going to accrue value for the investor. The InvIT since listing at a Book Value of INR 100, has been able to return ~20% since listing.
With electrification being the prime focus of the Government, InvITs like the PGCIL InvIT are set to get popular. Being invested in them can bring in the diversity to the portfolio and protection against volatility as the pricing is backed by tangible assets with a sovereign guarantee
Hope this helps
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- Power Grid to transfer assets worth Rs 7,500 crore to InvIT in FY23