Sterlite Power of Vedanta joins forces with GIC of Singapore for a $1 billion joint venture: report

Sterlite PowerTransmission (SPTL), a privately held corporation owned by Vedanta Group, is said to have partnered with Singapore’s sovereign wealth fund GIC to form a $1 billion joint venture. According to sources cited by The Economic Times, this cooperative venture hopes to take advantage of India’s growing need for power evacuation networks, which is being fueled by a boom in the demand for renewable energy.

SPTL is now demerging into two separate businesses. The management of the infrastructure division will fall under the purview of the first organization, which will have a particular focus on the construction and operation of electricity transmission assets via build-operate-transfer (BOT) agreements, which are normally designed as 30-year concessionaire agreements. The second company will concentrate on local manufacturing, which includes the creation of optical phase ground wires, conductors, and cables.

The turnkey arrangement in question serves third-party customers like state transmission utilities. More than 34,000 kilometers of communication projects based on optical phase ground wires are present in this industry and are either finished or ongoing under live line circumstances. These initiatives cover 15 states and 108 significant corridors.

The infrastructure sector will get $500 million from GIC in return for a 49% ownership interest. An initial $100 million will be invested, followed by an additional $400 million that will be distributed over the next two to three years if required. The payment will only be made if Sterlite Power is successful in obtaining bids for its planned capital expenditures and transmission project.

According to industry norms, GIC’s plan is to replace Sterlite as the only partner in India’s transmission business in order to get a larger share of the market. Between 2010 and 2022, this market routinely had yearly total projects valued at between Rs 10,000 and Rs 12,000 crore being offered.

“The strategy is to aggressively bid and construct more with these four seed assets. GIC is a constant source of funding and has high hopes for the development of the infrastructure in India. One of the firm executives was reported as stating, “SPTL has typically maintained 25% market share in concession projects and aspires to obtain a greater toehold.

The ET report claims that there is also a promise to use more funds than the $500 million previously set aside.

Sterlite Power would contribute four assets to this joint venture, totaling Rs 6,000 crore ($722.60 million). Additionally, over a similar two to three-year timeframe, the corporation plans to spend between Rs 1,700 and Rs 2,500 crore (up to $300 million) in cash while still holding onto its 51% ownership in the partnership.

“Transmission is a scale game, and a patient capital provider like GIC’s size and track record are crucial. With Greenko in the area of renewable energy and IRB in the area of roads, they have established comparable platforms. Therefore, they are also acquainted with this area, the official said.