Harsh Shah is CEO and whole-time director, IndiGrid, an infrastructure investment trust (InvIT) established to own inter-state transmission assets. He was closely involved in setting up the trust, from concept to its current position as a $1.5 billion listed platform. Shah is also a member of the SEBI Advisory Committee for InvITs and REITs. He is a member of the financial markets committee at CII and leads the working group on InvITs and REITs of the CII National Committee on Financial Markets. In the past, Shah has worked with Sterlite Power, Larsen & Toubro, L&T Infrastructure Finance Company and Procter & Gamble International Operations Pte Limited.
According to him, investments in the alternative energy space have increased substantially. “India’s renewables’ sector attracted investments of over $42 billion over the past four years and is currently at an inflection point, while witnessing significant consolidation, the pace of which is likely to increase in the near future.” He believes the timing is right for aggregating assets in this sector, given that the existing players may be monetising in light of the constrained capital market environment. “InvITs can offer a great way to monetise the operating renewable energy assets, which will enable developers to plough back capital to bid for new projects or de-lever. Monetisation may also be beneficial to developers as InvITs do carry an advantage with respect to cost of capital and tax benefits.” Shah believes that the outlook for InvITs is positive, although some issues need to be addres-sed. “The regulators are yet to enable insurance and pension funds to invest in debt securities of InvITs, which will allow better asset and liability management and offer a credible alternative to these investors.”
The power sector is und-ergoing a major transformation, he notes. “From the goal of being a power-surplus country, the spotlight is now on green energy and power for all. This entails heavy investment in renewables and transmission,” he says. An investment potential of Rs 4.2 trillion is envisaged in transmission over the next five years. Of this, the opportunity in transmission systems connected to renewable projects is Rs 420 billion over the next few years. “This will require fresh capital investment and recycling of invested capital for greenfield development. The new phase of growth calls for new solutions. In this capital-intensive sector, innovative funding models along with increased transparency are the need of the hour.”