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PowerGrid InvIT makes muted market debut; lists at Rs 104, a 4% premium to issue price

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

PowerGrid InvIT makes muted market debut; lists at Rs 104, a 4% premium to issue price
The initial public offering (IPO) of PowerGrid Infrastructure Investment Trust (PowerGrid InvIT) made a muted debut on the bourses today. The stock listed at Rs 104 per share on the BSE as well as NSE, up 4 percent from its issue price of Rs 100 per unit.
The IPO was open for subscription from April 29-May 3 with a price band fixed at Rs 99-100 per unit. Sponsored by Power Grid Corporation of India, this was the first InvIT to be launched by the government company.
An infrastructure investment trust (InvIT) is an investment vehicle that allows retail investors and institutions to invest in infrastructure assets like roads, power transmission lines, etc to earn a small portion of the income as a return over a period of time.
PowerGrid InvIT has been set up to own, construct, operate, maintain and invest in power transmission assets in India.
The company proposed 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.
The offer comprised of a fresh issue of Rs 4,993.48 crore and an offer for sale of Rs 2,741.51 crore by the selling unitholder.
Experts were mostly positive on PowerGrid InvIT’s business model, which is backed by predictable cash flows and offers growth visibility. Most brokerages had assigned a 'Subscribe' rating to the issue.
"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 a quarterly dividend and the unit’s price appreciation," the brokerage house Nirmal Bang said.

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