Sterlite Power InvIT’s IPO covered 16.3% on day two

The initial public offering (IPO) of India Grid Trust, an infrastructure investment trust (InvIT) sponsored by power transmission asset operator Sterlite Power Grid Ventures Ltd, continued its slow run on the second day of the issue, with investors bidding for only 16.3% of the issue size.

The weakness in secondary markets and the tepid listing of IRB Infrastructure Ltd’s InvIT Fund may have led to weak demand for Sterlite Power’s InvIT. The NSE index Nifty fell more than 1% on Thursday, its biggest one-day fall in four months, as investors booked profits on recent gains and global markets grappled with political uncertainty in the US.

The offering of 126.27 million units, excluding the anchor portion, received bids for 20.61 million units, stock-exchange data showed. The quota of units reserved for institutional buyers was subscribed 8% while the portion set aside for non-institutional investors, such as corporate houses and rich investors, was subscribed a tad more than 26%.

Institutional investors will not be allotted more than 75% of the units. Retail investors aren’t allowed to bid because InvITs is a new financial concept in India and yet to be tested in the market.

The IPO was covered just about 6% on the first day on Wednesday.

India Grid is the second InvIT to float an IPO. Earlier this month, IRB InvIT Fund’s offering was covered 8.5 times.

On Tuesday, India Grid raised Rs 1,012.43 crore ($158 million) from anchor investors. The fund allotted 101.24 million units to 16 institutional investors at the upper end of the Rs 98-100 price band.

The trust, which owns inter-state power transmission assets, is seeking to raise Rs 2,250 crore through the public issue that closes on Friday. India Grid was earlier looking to raise Rs 2,650 crore (around $390 million) through the listing.

The proceeds will be used for repaying loans and general corporate purposes. Sterlite Infraventures Ltd is the trust’s investment manager and Axis Trustee Services Ltd is its trustee.

Sterlite Power Grid is a subsidiary of Sterlite Power Transmission, which was de-merged from Sterlite Technologies Ltd with the latter retaining its telecom business in the listed entity. These entities are owned by billionaire Anil Agarwal-led Vedanta Group.

Morgan Stanley India Company Pvt. Ltd, Citigroup Global Markets India Pvt. Ltd and Edelweiss Financial Services Ltd are the lead managers to SPGVL’s InvIT issue.

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