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Sterlite Power’s InvIT IPO sails through on final day

19 May, 2017

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 (SPGVL), was fully subscribed on the final day with investors bidding 1.35 times the issue size.

The offering of 126.27 million units, excluding the anchor portion, received bids for 170.18 million units, stock-exchange data showed.

The quota of units reserved for institutional buyers was subscribed 1.14 times while the portion set aside for non-institutional investors, such as corporate houses and rich investors, was subscribed a tad more than 1.6 times.

Institutional investors will be allotted not 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 subscribed 17% on the second day on Thursday, data showed. It was covered about 6% on the first day on Wednesday.

On Tuesday, India Grid Trust had raised as much as Rs 1,012.43 crore ($158 million) through sale of units to anchor investors.

Sterlite’s trust, which owns inter-state power transmission assets, is seeking to raise Rs 2,250 crore through the public issue. 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.

India Grid is the second InvIT to float an IPO. Earlier this month, IRB launched its InvIT Fund to raise as much as Rs 4,655 crore (around $725 million). IRB InvIT Fund was covered 8.5 times, but it closed below its issue price for the second day on Friday after a lukewarm listing on Thursday.

The NSE index Nifty surrendered its gains to end in the red on Friday after rising to record-high levels during the session. On Thursday, it had fallen more than 1%, 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.

SPGVL 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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Sterlite Power’s InvIT IPO sails through on final day

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