The initial public offering (IPO) of PowerGrid Infrastructure Investment Trust (PowerGrid InvIT) opens for subscription today. It will remain open till May 3.

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The price band for the offer has been fixed at Rs 99-100 per unit and the company plans to raise Rs 7,735 crore through its public issue. The offer comprises a fresh issue of Rs 4,993.48 crore and an offer for sale of Rs 2,741.51 crore by the selling unitholder.

Sponsored by Power Grid Corporation of India, this will be the first InvIT to be launched by the government company.

The company proposes to utilise the net proceeds from the fresh issue offer for providing loans to the Initial Portfolio Assets for repayment or pre-payment of debt, including any accrued interest, availed by the Initial Portfolio Assets; and for general corporate purposes.

Read here:

PowerGrid InvIT IPO: Here are key things to know before investing

PowerGrid Infrastructure Investment Trust on April 28 raised a little over Rs 3,480 crore from anchor investors ahead of its initial public offer.

"It has been decided to allocate 34,80,74,100 units at Rs 100 apiece to 47 anchor investors, aggregating the total to Rs 3,480.74 crore," according to a circular uploaded on the BSE website.

Experts are positive on PowerGrid InvIT’s business model, which is backed by predictable cash flows and offers growth visibility.

Most brokerages have assigned 'Subscribe' rating to the issue.

Nirmal Bang

"In our view, such a spread is very attractive given the high degree of certainty of cash flows & distribution per unit going forward. Investor return in PG Invit which is a quasi-equity instrument will be a combination of quarterly dividend and the unit’s price appreciation," the brokerage said.

BP Equities

"Going ahead, the company’s healthy growth prospects and a strong pipeline of projects will enable it to leverage its operational performance in long term," BP Equities stated. Therefore, it assigned a “Subscribe” rating to this IPO issue for long term.

Choice Broking

"With initial portfolio assets characterised with perpetual ownership, higher visibility on cash flows, minimal counterparty risk and lower operating risk, we feel that the trust is well placed to get benefited from the structural growth in the power transmission space," said Choice Broking, adding, "It will be fair to assume that PGInvIT will have an pre-tax yield of over 7 percent, which is better than the prevailing fixed deposit rates offered by the banks."

GEPL Capital

"Investors can expect a pre-tax yield of 9 to 11% based on the utilisation of funds to repay the SPV level debt," said GEPL.

An important feature of the InvIT is its ability to produce consistent cash flows owing to long tenure contracts, and headroom for growth given potential to lever the balance sheet and acquire more assets from PowerGrid. The management has also mentioned of a strong pipeline of projects that can be monetized by the InvIT.

GEPL Capital recommends subscribing to the issue on the back of "its ability to produce consistent cash flows owing to long tenure contracts, and headroom for growth".

Elara Capital

Elara Capital says it is a good option for investors looking for a 10-12% yield arising from stable cashflow.

Angel Broking

The brokerage firm expects very limited capital appreciation in near future for the InvIT. InvIT yield will be around 8% in FY2022, which is better than the other fixed income. However, it expects muted growth going forward as all assets in the InvIT portfolio are mature assets.

"As we are neutral on the outlook for the industry as well as the company, we would recommend to “Neutral” to the issue," Angel Broking said.

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First Published:Apr 29, 2021 10:42 AM IST