PowerGrid Corporation of India, an infrastructure investment trust of PowerGrid Corporation of India, will launch an IPO tomorrow to raise Rs 7735 crore. The InvIT IPO will remain open for subscription until 3 May 2021.
For this InvIT IPO, Powergrid has fixed the price of the unit in the price band of 99 to 100 rupees. For this, PowerGrid InvIT will issue units worth Rs 4,993.48 crore of fresh shares. At the same time, the current unitholders of the company will issue units worth Rs 2741.51 crore. Power Grid has appointed ICICI Securities, Edelweiss Financial Services and HSBC Securities as lead managers for this IPO.
In this IPO, 75% of the units are reserved for Institutional Investors, out of which 60% is reserved for Anchor Investors. At the same time, 25% share is reserved for non-institutional investors on a ratio basis. Investors can bid for at least 1100 units in this InvIT IPO. After this, bidding can be done in multiple of 1100.
Actually, the company is going to monetise its assets which were approved by the Cabinet Committee of Economic Affairs in September 2020. This IPO of Power Grid will be the first InvIT IPO of any PSU company in the country. Let us tell you that private sector companies have brought InvIT IPO earlier.
Let us tell you that in InvIT ie Infrastructure Investment Trust IPO, the company raises money from people and institutional investors just like a normal IPO. Invit is basically a collective investment scheme that is similar to a mutual fund. The funds raised through this IPO are used on infrastructure projects and the share of profits in that project goes to the investors investing in it.
The funds raised by Power Grid from this Invit IPO will help in expanding the transmission network and the company will be able to make new investments in the sector. At the same time, the company will also reduce its debt burden with this amount. For this, the company will first transfer its debt (debt) to the Infrastructure Investment Trust (InvIT) and instead raise capital from the people.
What is InvIT IPO
Let us tell you that Infrastructure Investment Trust (InvIT) is a company that gives investors the opportunity to invest in units or portfolios of infrastructure projects. In this, the investors do not own any physical infra project but they get some percentage share in the earnings from it. InvITs are similar to IPO mutual funds.
What is the expert saying
Investment fund Elara Capital says that for investors who want to invest for 10 to 12% yield annually, this PowerGrid IPO is a good option for investment. The offer price of this IPO is 3.5 times the book value. Also, the company is able to maintain consistent cash flow, hence it is a good investment opportunity for investors.
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