Business Standard

GIC collaborates with Vedanta's Sterlite Transmission for $1 bn venture

GIC will put up $500 million in the infrastructure business for a 49 per cent stake. This investment will depend on Sterlite Power winning project tenders

Sterlite Power Transmission Limited

Sterlite Power Transmission Limited

BS Web Team New Delhi

Listen to This Article

To draw on the rising demand for power evacuation networks in the country, Sterlite Power Transmission (SPTL) is collaborating with Singapore's sovereign wealth fund, GIC, to set up a $1-billion joint venture platform, according to a report by The Economic Times (ET). Sterlite Power Transmission (SPTL) is a privately held Vedanta Group firm.

At the present moment, SPTL is in the process of separating into two businesses. One business will house the infrastructure division that develops and operates power transmission assets on a build-operate-transfer (BOT) basis. The other part will accommodate the domestic production business of cables and conductors.

GIC will put up $500 million in the infrastructure business for a 49 per cent stake. The deployment of funds will take place in tranches, with an initial $100 million and $400 million to come in over the next two to three years on a need-to-draw-down basis. This investment will depend on Sterlite Power winning project tenders.
 
The Singaporean sovereign wealth fund intends to be the exclusive partner of Sterlite in India in the transmission segment to attempt to win a larger share of the pie. The market has seen annual cumulative projects worth Rs 10,000-12,000 crore bid out yearly since 2010-22. There is also a possibility that capital even beyond the $500 million could be deployed.

Sterlite Power will transfer four assets with an enterprise valuation of $722.60 million into this joint venture. Also, the firm could invest up to $300 million in cash over a similar two to three-year interval, as well as use its capabilities to maintain its 51 per cent stake in the alliance.

An official was quoted as saying that the company plans to bid and construct more aggressively. Transmission is a scale game, and the strength of a capital provider like GIC is important.

Don't miss the most important news and views of the day. Get them on our Telegram channel

First Published: Oct 25 2023 | 11:22 AM IST

Explore News