Sterlite Power, which is backed by metals magnate Anil Agarwal's Vedanta Group, has embarked on an internal restructuring exercise to unlock value as part of which the firm seeks to carve out its solutions vertical and then induct Singapore's sovereign wealth fund GIC as a strategic partner for the power transmission business, multiple industry sources with knowledge of the matter told Moneycontrol.
"An internal rejig is underway at Sterlite Power. The plan is to demerge the solutions business and then list it later on the domestic bourses," said one of the persons above. The solutions business aids power utilities with strategic solutions for augmentation and upgrades.
This person elaborated, "GIC is not keen on exposure to the solutions business. Once the spin-off is done, GIC plans to invest around $300 million as part of a 51:49 joint venture with Sterlite Power for the power transmission business."
Two other persons confirmed the above rejig plans and added that talks between GIC and Sterlite Power are at an advanced stage.
A fourth person said that Avendus Capital is advising Sterlite Power on the overall deal and Deutsche Bank has also been roped in for the GIC funding leg of the transaction.
"The transaction is picking up pace and is expected to be finalized in the next two weeks," this fourth person added.
All the four persons above spoke to Moneycontrol on the condition of anonymity.
In response to an email query from Moneycontrol, a Sterlite Power spokesperson said, "As any growth-oriented company, we are always evaluating multiple options for financing our growth and maximize shareholder value. However, as a policy, we don't comment on market speculations."
Moneycontrol could not elicit an immediate response from Avendus Capital and Deutsche Bank. An email query sent on GIC's website remained unanswered at the time of publishing this article.
Incidentally, Sterlite Power is the sponsor of India's first power sector InvIT, India Grid Trust (IndiGrid) that is listed. Pratik Agarwal, the MD of Sterlite Power, is the nephew of Anil Agarwal.
In September 2022, the firm announced that it had withdrawn its DRHP and deferred its listing plans due to unfavourable market conditions.
Announcing the recent acquisition of Fatehgarh III Beawar Transmission Limited, a special purpose vehicle (SPV) from PFC Consulting Limited (PFCCL), Pratik Agarwal said, “The development of green energy corridors is a critical part of India’s nation building effort. These corridors will help India achieve its renewable energy vision of 500 GW by 2030. With our unique capabilities and expertise, Sterlite Power is committed to contributing to this mega effort."
Sterlite Power: Internal rejig underway
Under its solutions business, which is proposed to be demerged, Sterlite Power helps power utilities tackle their network congestion challenges by providing bespoke solutions for upgrade/uprate of brownfield transmission infrastructure projects. These strategic solutions through system design, application engineering, complete engineering procurement and construction as well as project management , commissioning and lifecycle services, are aimed at improved performance in the short and long term.
Sterlite Power has 34,000 km+ OPGW (optical ground wire) -based communication projects under live line condition completed or under execution with 108 critical corridors in 15 states.
The firm is also a leading manufacturer of power cables, conductors and OPGW, supplying to all major Indian states and private utilities besides exporting to 60+ countries. It has four manufacturing assets in Silvassa, Jharsuguda and Haridwar.
Under the convergence vertical, Sterlite Power acts as a provider of connectivity solutions for power and telecom companies in India. The business creates a data network by leveraging existing utility fibre infrastructure, either its own or through its partners’ assets.
What is GIC eyeing?
Sterlite Power's Global Infrastructure business line bids for, designs, constructs, owns and operates power transmission assets and currently has operations in India and Brazil. The firm has a portfolio of 31 completed and sold as well as under construction projects. This covers approximately 15,000 circuit kilometers (ckm) of transmission lines across Brazil and India. According to Crisil, it has a 31.5 percent market share, by tariff of inter-state projects awarded under competitive bidding in India.
In July, GIC announced that it was setting up a $2bn platform with listed smart meters maker Genus Power Infra.
According to a PTI report in March, the industry is expecting the government to invite bids for power transmission infrastructure projects worth Rs 1.50 lakh crore in the next 18 months.
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