Ratings major Icra on Thursday said it expects equity capital raising of about R20,000 crore in the next 12 to 18 months via infrastructure investment trusts (InvITs).
“We expect the first InvIT issuance to take place in the next three to six months, once the concept finds acceptance from the market, inducing both developer and investor confidence in InvITs,” Rohit Inamdar, senior V-P, Icra said.
“These structures have started to attract increased interest and could be crucial for the estimated $30 billion capital that infrastructure projects need,” he added.
This would provide a fillip to infrastructure growth in the country from planned capital raising via a new route.
Icra said that InvITs are poised to become an attractive route for developers to unlock capital in operational infrastructure projects, mostly in the roads sector, along with renewable energy and power transmission.
At present, a majority of credit to the infrastructure sector is from banks and infrastructure finance companies who have advanced an estimated credit of R16 lakh crore. Apart from this, equity capital in infrastructure projects is estimated to be in the range of R6-8 lakh crore. According to Icra, a large part of this capital is in completed projects and InvIT can help unlock some of this capital which can be deployed in newer projects.
InvITs are collective investment vehicles which make investments in infrastructure projects either directly or through special purpose vehicles (SPV). The regulations for InvITs were notified by Securities and Exchange Board of India (Sebi) in September 2014. Over the last two years, through various initiatives, a majority of the road blocks for the the launch of InvITs have been cleared.
InvITs would not only enable infrastructure developers to recycle equity in large commissioned projects by selling it to long-term institutional investors like pension funds, insurance companies, mutual funds and retail investors, but would also provide investors with steady and stable returns together with an inflation hedge.