Product Overview

The case describes the structure of one of the earliest infrastructure investment trusts (InvITs) created and launched in Indian markets in 2017. IndiGrid was an InvIT created by Sterlite Power Grid Ventures Limited (SPGVL), the Sponsor. As a developer, SPGVL had been in the business of constructing and making available transmission links and assets to the grid operator on the basis of competitively bid annuity-like payments over 25 to 35 years. IndiGrid, an InvIT, acquired the transmission assets of the Sponsor to enable wider participation of investors. As the case illustrates, InvITs were allowed to act as pass-through vehicles for tax purposes in order to facilitate investors’ direct participation in financing private-sector infrastructure investments. Historically, most investments made by private players in the infrastructure sectors in India relied on bank debt and risk capital brought by the developers or mobilised via equity markets.

Learning Objectives

In addition to introducing the concept of InvITs and describing their potential role in relaxing the financing constraint created by the lack of an active corporate debt market in India, the case offers an instructor two other topics for class discussion and analysis. The case can be used to a) analyse why the market is discounting the IndiGrid unit price relative to its issue price and b) value IndiGrid’s acquisition of Patran Transmission Company Limited (PTCL). The case also increases participants’ understanding of the evolution of the regulatory framework for creating InvITs in India, taking into account the need for financing infrastructure projects and addressing the concerns of investors investing in the sector through InvITs.