Sterlite Power Transmission Limited (SPTL) has announced its strategic decision to demerge its Power Transmission Infrastructure business, which operates under a BOT (Build, Operate, Transfer) model in India and Brazil. This demerger is part of the company’s broader strategy to create distinct business verticals based on their customer base, investor class, and return profiles.
As a result of this move, SPTL will continue to retain its Global Products & Specialized EPC Services business, as well as the Convergence – Fiberco business.
Pratik Agrawal, Managing Director of Sterlite Power Transmission Limited, commented on the development, stating,“The demerger will enable both entities to create independent capital structures, unlock value and attract investors suitable for the distinct growth profiles for each entity. We are confident that this will bring substantial value for our shareholders and help us in creating two world class business entities.”
The Power Transmission Infrastructure business of Sterlite Power encompasses transmission assets in both India and Brazil. These assets will be transferred to Sterlite Grid 5 Limited (SGL 5). Both SPTL and SGL 5 will have independent boards and focused executive management teams. Under the approved demerger scheme by the Board of Directors, existing Sterlite Power shareholders will receive one additional share of SGL 5 for each share of SPTL they currently hold.
The global power transmission network is expected to double in size over the next eight years, driven by aggressive additions of renewable energy sources. Demand for power products is projected to remain robust in the medium term, driven by healthy demand, global capital expenditure earmarked for renewable capacity expansion, expansion in transmission and distribution (T&D), the “China+1” theme, and favorable tariff structures in the United States.
The company has filed the demerger scheme with the National Company Law Tribunal (NCLT) in Mumbai, seeking approval for the proposed action. The approval process is anticipated to conclude within the next 6 to 8 months, involving the acquisition of various approvals, including those from shareholders, creditors, and regulatory authorities.
