Genus Power hits upper circuit as GIC acquires 74% stake in its smart metering JV

Singapore's sovereign wealth fund GIC has announced to acquire a 74% stake in Jaipur-based Genus Power Infrastructures Ltd's new smart metering solutions venture for $2 billion.

Reacting to the news, Genus Power stock hit the upper circuit and rose to a 52-week-high at ₹168.90 on the Bombay Stock Exchange. The stock opened a gap up at ₹154, up from the previous session close of ₹140.75, to rise to the intra-day high of ₹168.90. At the current share price, the market cap of the company stands at ₹4,339.91 crore.

The stock has seen a 42.71% rise in the past five days and surged 72.67% in the last month. It has given almost double return (97.13% rise) in the past six months and year-to-date period.

The pact has been signed between Genus PowerInfrastructures and Gem View Investment Pte Ltd, an affiliate of GIC, Singapore.

The agreement mandates the setting up of a platform for undertaking advanced metering infrastructure service. GIC will hold a 74% stake, while Genus will hold a 26% stake in the platform.

"The partners have committed to an initial pipeline, with a capital outlay of around 2,000,000,000. Genus would be the exclusive supplier to the platform for smart meters and associated services," the company said.

Raj Agarwal, CEO & MD, Genus, said the company has achieved market leadership through its strong focus on R&D and innovation. "Our capacity to deliver next-generation Smart meter technology and related Solutions for the evolving needs of the Indian energy sector will be an asset to the Platform”.

Ang Eng Seng, chief investment officer of infrastructure at GIC, said the fund believes smart meters will play a crucial role in India’s ongoing journey towards improving power sector efficiency. "India remains a key long-term market for GIC given its strong economic fundamentals and favourable demographics, which are spurring opportunities in many sectors including infrastructure development.”

The agreement also involves an investment by Chiswick Investment Pte Ltd, an affiliate of GIC, of up to ₹519 crore by way of a preferential allotment of warrants, which will constitute, if and when GIC elects to exercise such warrants, 15% of the issued and paid-up share capital of Genus on a fully diluted or as converted basis.

The transactions are, however, subject to the approval of Genus shareholders and fulfillment of customary closing conditions to the satisfaction of the GIC affiliates.

The deal represents the largest transaction in the smart metering space in the country, and positions Genus at the forefront of the smart metering revolution underway in the country. "With these transactions, Genus would supplement its manufacturing and execution prowess with access to capital. Genus will scale up the deployment of energy “smart meters” across India, supporting energy security and transition through grid optimisation and efficiency," the company said in a statement.

Notably, the government is implementing the National Smart Metering Project, under the Revamped Distribution Sector Scheme (RDSS), with a plan to install 250,000,000 meters by 2025, with an estimated investment of $30 billion.

With technical and commercial losses exceeding 15% for all major Indian utilities leading to high financial losses, smart metering projects under the RDSS scheme are conceptualised to reduce such losses, improve the operational efficiency of DISCOMs and improve their financial sustainability by providing results-linked financial assistance.

Smart meters are also at the core of operationalising the recently announced Time of the Day Metering (ToD) announced by the Centre. AMISP concessions are awarded by various state utilities under RDSS with a concession life of up to 10 years and concessionaires receive a monthly service charge during this period for installing and maintaining meters and the associated infrastructure.