According to an article by The Economic Times (ET), Sterlite Power Transmission (SPTL) is working with Singapore’s sovereign wealth fund, GIC, to establish a $1 billion joint venture platform in order to capitalise on the growing need for power evacuation networks in the nation. Vedanta Group company Sterlite Power Transmission (SPTL) is privately held.
SPTL is currently in the process of splitting up into two companies. The infrastructure segment, which builds and manages power transmission assets on a build-operate-transfer (BOT) basis, would be housed inside one firm. The remaining portion will house the country’s cable and conductor manufacturing industry.
GIC will invest $500 million for a 49% share in the infrastructure company. The money will be released in phases, starting with $100 million and adding $400 million every two to three years based on the amount that has to be drawn down. The success of Sterlite Power in project tenders will determine this investment.
To try to take a bigger piece of the market, the Singaporean sovereign wealth fund plans to be Sterlite’s only partner in India for the transmission business. From 2010 to 22, the market has witnessed the bidding of cumulative projects valued at Rs 10,000-12,000 crore on an annual basis. Additionally, it is possible that funds in excess of $500 million will be used.
Four assets valued at $722.60 million each will be transferred by Sterlite Power into this joint venture. In addition, the company might use its resources to keep its fifty-one percent share in the alliance in addition to spending up to $300 million in cash over a comparable two- to three-year period.
According to a cited official, the corporation intends to bid and build with greater vigour. The power of a capital provider such as GIC is critical in the scale game that is transmission.
According to one of the sources who spoke to Reuters earlier, Reliance Retail was valued at $100 billion. Investors interested to invest at least $500 million each in the company included GIC of Singapore, the Abu Dhabi Investment Authority (ADIA), and the Public Investment Fund (PIF) of Saudi Arabia.
When Reuters asked for comments, PIF did not reply, and GIC and ADIA declined to comment. “We do not comment on media speculation and rumours,” Reliance declared.
According to a second source, negotiations were ongoing with one or two additional investors to raise funds, and it was possible that some of the three investors may wind up contributing less than $500 million.