Image credit: Sterlite Power
Global investment manager AMP Capital has established a 50/50 partnership with Sterlite Power Transmission Limited (Sterlite Power) for the development of energy transmission projects in India. This marks the first investment in India for AMP Capital’s global infrastructure equity strategy.
AMP Capital and Sterlite Power will each invest an initial amount of approximately USD 150 million in the development of four transmission projects, and have put in place debt financing, which represents a total capital outlay of around USD 1 billion. These projects have a circuit length of nearly 1800 kilometres of transmission lines across the Western, Southern and North Eastern regions of India. They will provide the critical infrastructure required for evacuating power from multiple renewable energy generation projects and will strengthen the power delivery infrastructure in the country.
The partners may in the future contribute further capital for new inter-state transmission projects which are expected to be tendered by the government of India. Therefore, the partnership has the potential to reach an overall investment size of USD 500 million.
Image credit: Sterlite Power
Transmission infrastructure has underpinned the rapid growth seen in the generation capacity of India over the last decade. This growth has been led by renewable energy, where India is rapidly becoming recognised as a global leader, having surpassed its ambitious Paris Agreement targets with 38% of generation capacity currently from clean energy. The Indian power market still has huge potential for expansion, with low relative per capita power consumption in the country. Due to years of underinvestment in transmission capacity there is significant demand for investment, and the Indian government has been actively promoting the participation of the private sector in transmission line development through the continued implementation of supportive regulatory reforms.
Sterlite Power is a leading developer of transmission projects with a robust execution record across India and Brazil. It has won a third (by tariff) of all inter-state private transmission projects awarded in India under competitive bidding since 2011, and has successfully established its unique asset flip business model across both markets. Sterlite Power has completed and sold nine transmission assets to date in India.
Sharat Goyal, Head of India, Infrastructure Equity at AMP Capital said: “AMP Capital and Sterlite Power believe that this is a unique partnership bringing together operational and investment expertise to support the hitherto under-invested construction phase of power infrastructure in India. Our investment will create a pool of valuable transmission assets, with long-term contractual arrangements and a robust payment security framework, which are extremely attractive to yield-seeking investors.
“India is a key target market for AMP Capital and we have dedicated time and resource to finding a compelling investment opportunity suited to our clients. This investment capitalises on the opportunity presented by the Indian infrastructure sector at this time, as well as benefitting from policy initiatives like Infrastructure Investment Trusts (INVITs) which have created transparent, market-driven exit opportunities for investors willing to invest capital in the development of greenfield infrastructure projects in India.”
Commenting on the transaction, Anuraag Srivastava, CFO Sterlite Power said “We are delighted to enter into a partnership with AMP Capital – a leading global infrastructure private equity firm. This investment is another testimony of continued trust reposed on us by the investor community.”
Image credit: Sterlite Power
AMP Capital was advised by Citigroup (financial), PwC (commercial and tax) and AZB (legal). Sterlite was advised by Moelis & Company and Credit Suisse (financial), Khaitan & Co (legal), and EY (tax).
About AMP Capital
AMP Capital is a global investment manager with a heritage and strength in real estate and infrastructure, and experience in fixed income, equities and multi-asset solutions. AMP Capital has been investing in infrastructure since 1988 and has US$21bn infrastructure equity and debt assets under management as at 30 June 20201. AMP Capital has been ranked in the top 10 infrastructure managers globally, based on total capital raised.2 AMP Capital is owned by AMP Limited, which was established in 1849, and is one of Australia's largest retail and corporate pension providers.
1 As at 30 June 2020. Figure consists of the Net Asset Value of certain funds and clients managed by AMP Capital taking into account all of the assets less any liabilities. This includes cash and liquidity of such funds in addition to any committed but undrawn capital.
2 Derived from the 2020 Infrastructure Investor 50. Ranking based on the amount of infrastructure direct investment capital raised by firms between 1 Jan 2015 and 31 Aug 2020
About Sterlite Power
Sterlite Power is a leading global developer of power transmission infrastructure with projects of over 13,700 circuit kms and 24,800 MVA in India and Brazil. With an industry-leading portfolio of power conductors, EHV cables and OPGW, Sterlite Power also offers solutions for upgrading, uprating and strengthening existing networks. The Company has set new benchmarks in the industry by use of cutting-edge technologies and innovative financing. Sterlite Power is the sponsor of IndiGrid, India’s first power sector Infrastructure Investment Trust (“InvIT”), listed on the BSE and NSE. Sterlite Power has been recognised with The Economic Times Innovation Awards 2020 and is a recipient of prestigious global awards from S&P Global Platts and International Project Management Association (IPMA). www.sterlitepower.com