The condition of the economy is bad during the Corona period. The advice of economic experts is that the government should focus on infrastructure development. Modi government is also very ready for infra development and work is being done at a very fast pace. In such a situation, if you invest in the infra sector, then there are chances of bumper earnings. Good news for investors. The state-run electric transmission company Power Grid Corporation of India (PowerGrid) is bringing an Invit IPO on April 29.
This is the first time that a government company is going to go public through the INVIT option. It is not an IPO of trust but of a company. Before understanding more about this IPO, let us understand what is investment trust. This is a kind of investment scheme that you can understand as a mutual fund. Retail investors or institutional investors invest in it and that money is invested in the infra project. The income earned from investment in the project is distributed among the investors. It is a kind of trust in which individuals, companies, institutions invest.
Know how InvIT works
The Invit has a sponsor who prepares its setup and appoints the trustee. When the investment is listed in the stock market, the sponsor has to lock at least 25 percent of the holding for 3 years. There is also a trustee which is a separate entity. Apart from this, there is an investment manager and a project manager. Power Grid Corporation of India is its own sponsor in PowerGrid Invit. The trustee is IDBI Bank and PUTL (Powergrid Unchar Transmission Limited) is the investment manager.
IPO will be worth 7700 crores
On 7 January 2021, the investment trust of Power Grid was registered with SEBI and its purpose was to bring an IPO. This IPO will open on 29 April and will be open till 3 May. It is believed that this IPO will be of 7700 crores, in which a fresh issue of 4500 crores and 3200 crores will be released under the offer for sale. There is no reservation for retail investors.