Major issue with PGInvIT is regulatory change which made selling asset though InvITis unattractive for Power Grid and will not not use InvIT, With Power Grid not selling its assets through InvIT and PGInvIT not finding assets outside to bid. PGInvIT is facing difficulty to bring in new asset to its portfolio,
Although I do see this but it's not due to regulatory reasons -
what is the current status of power grid's asset monetization plan?
Power Grid Corporation of India (PGCIL) has made progress in its asset monetization plan through its infrastructure investment trust (InvIT) called PGInvIT, but has recently shifted focus to other financing methods:
- In 2021, PGCIL transferred 5 projects to the PGInvIT as part of its initial public offering, raising Rs 7,735 crore[5].
- However, PGCIL has not sold any additional assets to the InvIT for a while. This is because:
1) **PGCIL has found securitization of cash flows more efficient than selling assets to the InvIT**. In FY2023, PGCIL raised Rs 3,500 crore through securitization and plans to raise Rs 6,800 crore this way in FY2024[4].
2) **When interest rates rose, PGCIL saw a decline in asset valuations, leading to lower monetization than its Rs 6,800 crore target in FY2023 through the InvIT**[4].
- PGCIL is currently prioritizing hiving off its profitable telecom business into a separate subsidiary by June 2023 and targeting Rs 1,000 crore revenue from it in FY2024[3].
So in summary, while PGCIL has successfully monetized some assets through its InvIT IPO, it has recently found other financing methods like securitization more efficient and is focused on restructuring its telecom business, leading to a pause in further InvIT asset sales for now.
Major issue with PGInvIT is regulatory change which made selling asset though InvITis unattractive for Power Grid and will not not use InvIT, With Power Grid not selling its assets through InvIT and PGInvIT not finding assets outside to bid. PGInvIT is facing difficulty to bring in new asset to its portfolio,
What regulatory changes made it bad ?
What happened after this -
https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1652428
Although I do see this but it's not due to regulatory reasons -
what is the current status of power grid's asset monetization plan?
Power Grid Corporation of India (PGCIL) has made progress in its asset monetization plan through its infrastructure investment trust (InvIT) called PGInvIT, but has recently shifted focus to other financing methods:
- In 2021, PGCIL transferred 5 projects to the PGInvIT as part of its initial public offering, raising Rs 7,735 crore[5].
- However, PGCIL has not sold any additional assets to the InvIT for a while. This is because:
1) **PGCIL has found securitization of cash flows more efficient than selling assets to the InvIT**. In FY2023, PGCIL raised Rs 3,500 crore through securitization and plans to raise Rs 6,800 crore this way in FY2024[4].
2) **When interest rates rose, PGCIL saw a decline in asset valuations, leading to lower monetization than its Rs 6,800 crore target in FY2023 through the InvIT**[4].
- PGCIL is currently prioritizing hiving off its profitable telecom business into a separate subsidiary by June 2023 and targeting Rs 1,000 crore revenue from it in FY2024[3].
So in summary, while PGCIL has successfully monetized some assets through its InvIT IPO, it has recently found other financing methods like securitization more efficient and is focused on restructuring its telecom business, leading to a pause in further InvIT asset sales for now.
Citations:
[1] Cabinet approves asset monetization of subsidiaries of Power Grid ... - PIB https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1652428
[2] Power Grid | Government of India https://powermin.gov.in/en/content/power-grid
[3] Power Grid to hive off telecom business by June https://www.thehindubusinessline.com/news/power-grid-to-hive-off-telecom-business-by-june-targets-1000-cr-revenue-in-fy24/article66888127.ece
[4] power grid corp stake sale - The Economic Times - IndiaTimes https://economictimes.indiatimes.com/topic/power-grid-corp-stake-sale
[5] Meetings/Notices | POWERGRID https://www.powergrid.in/en/meetingsnotices
No, there is change in the owner ship after that point POWERGRID considered InvIT as not right instrument for it.
I believe FY24Q2 or Q3 of POWERGRID is discussed in detail.
FY24Q3 reference
So, going forward you will not be down selling any of your assets to PowerGrid InvIT
is that the right assumptions Sir?
Ans: No, we can't assume like that. As of now, the NMP guidelines doesn't permit to
transfer the shares permanently to an SPV, not only PG InvIT to any anyone. So, this
is what the NMP guideline says. So as of now this is the position.
okay , its not a regulation but Gov NMP guideline... that's known as i have said nobody knows when gov would do
and if i remember reading about it correctly its just that they will do it in Fy27-28 after two years of completion of some projects.
Please check the valuation reports many of the SPVs projected revenues fall quite a bit close to 30% -40% within next 3-4 years , I don't know how you are assuming higher coupon payments going forward - the current Rs. 12 is not even feasible in coming years. https://www.pginvit.in/uploads/68c3e2f7-6087-4d8a-a966-2e10e73087b1/05_Annexures_(Annual_Report_FY_2022-23).pdf
PGInvit has been abandoned by PG.
Not true really but things moves slow in PSUs.