Global alternative assets giant KKR is moving to acquire a controlling stake in Sterlite Investment Managers Ltd and purchase a sizeable portion of units in India Grid Trust, the infrastructure investment trust (InvIT) comprising power transmission projects. Singaporean sovereign wealth fund GIC is also participating in the multi-layered transaction.
According to a stock-exchange filing, KKR will acquire up to 74% stake in Sterlite Investment Managers though several tranches via an affiliate.
India Grid Trust has also said it is raising capital of about Rs 2,560 crore (around $366 million) via a preferential issue of equity shares.
In this transaction, KKR will subscribe to 42.2% of India Grid Trust units via a different affiliate and then purchase 15% from the InvIT’s sponsor, Sterlite Power Grid Ventures Ltd.
Specifically, KKR is investing about Rs 1,084 crore ($155 million) while GIC is putting in Rs 980 crore ($140 million) in the India Grid Trust issue.
KKR will eventually hold 36.87% of India Grid units post the issue, according to the disclosure.
This transaction will designate KKR as a co-sponsor of the India Grid InvIT, alongside Sterlite Power Grid Ventures. The transactions are subject to shareholder approval, which will be sought on May 24 in an extra ordinary general meeting, the firm said.
India Grid had earlier said that it wanted to raise Rs 3,000 crore through a qualified institutional placement (QIP), though it now seems to have opted for issuing preference shares instead. India Grid’s QIP clearance is valid till July.
This is KKR’s first bet on the Indian infrastructure space and comes months after it appointed Brookfield executive Hardik Shah to head its infrastructure vertical in the country last November. The firm is also said to be in the process of launching an Asian infrastructure fund.
Bulking up on assets
India Grid said it will acquire five transmission projects from its sponsor Sterlite Power Ventures for a total enterprise value of Rs 11,539 crore (around $1.65 billion).
These projects are NRSS XXIX Transmission Limited, Odisha Generation Phase II, Gurgaon Palwal Phase II Transmission ltd, Khargone Transmission Ltd and NER II Transmission Ltd.
Earlier this year, India Grid Trust chief executive officer Harsh Shah told VCCircle that the InvIT was aiming to boost its overall assets under management (AUM) to Rs 30,000 crore in three years. This would mark nearly a six-fold jump from its AUM of Rs 5,300 crore at the time.
InvITs are akin to a special purpose vehicle designed to own and manage income-generating infrastructure projects.
Sterlite’s India Grid Trust is among the three InvITs that have been floated since the Securities and Exchange Board of India (SEBI) notified regulations in 2016 for setting up such trusts. The other two are IRB’s InvIT and L&T Infrastructure Development Projects.