IRB InvIT Fund initial public offering(IPO) opened for subscription on Wednesday at a price band of Rs 100-102 per unit. The issue will close on May 5. InvITs or infrastructure investment trusts are those debt instruments which will be traded in the market and can act as investment vehicles for the sponsors. It is the first infrastructure to hit the markets. InvITs are designed to attract low cost long term capital from FIIs, Insurance and Pension Funds and the DIIs (mutual funds, Banks) which will also benefit to other investors including HNI clients. Analysts see it as a potential to change the
According to brokerage house Philip Capital, “Launch of IRB’s InvIT as a big boost for the infrastructure sector. The successful listing of this InvIT will pave the way for many similar listings (three others are already lined up), and help the sector discover a new source of capital, other than equity (invested by developers) and debt (by financial institutions). It will enable BOT developers (such as IRB, Ashoka, Sadbhav, ITNL) to unlock value and ‘rotate’ capital in their portfolio.”
The IRB InvIT Fund on Tuesday raised around Rs 2,100 crore from anchor investors. The company in a press release said that it has allotted 20.53 crore units on an average of Rs 102 to 28 anchor investors for a sum of Rs2,094.50 criteria.
IRB’s InvIT fund expects to raise Rs 5,035 crore comprising fresh issue of units aggregating to Rs 4,300 crore and an offer-for-sale of nearly 3.48 crore units by IRB Infra Developers and its arms – Modern Road Makers, Aryan Toll Road, ATR Infra and Ideal Road Builders. “Of this, Rs 3350 crore will be used for repayment of external debt, and the remaining Rs 1700 crore will accrue to IRB as repayment of sub-debt/equity-invested. This will provide the company with Rs 1700 crore of cashflow, which it can utilise to fund the equity requirement of current/future projects. It will also reduce the gross debt at the consolidated level by Rs 5000 crore, reducing the leverage to 2x from the current 3x, thereby possibly improving its credit rating and borrowing cost. At the same time, the company keeps 15% in the InvIT, ensuring it gains from the cash flows and potential upside in the InvIT units’ price,” brokerage house Axis Capital said.
IDFC Bank, Credit Suisse Securities and ICICI Securities are the lead managers to the issue, while Karvy Computer share is the register to the issue. The units are proposed to be listed on BSE and National Stock Exchange (NSE).
Bids can be made for minimum 10,000 units and thereafter in multiples of 5,000 units, which tanslates to a minimum investment of Rs 10 lakh and further in multiples of Rs 5 lakh.
IRB’s InvIT consists of six projects spread across five states. All projects are operational and adhere to the criteria defined in InvIT regulations. Total capital invested in these projects is Rs 8080 crore, with equity investment at Rs 2,150 crore.
According to Philip Capital, the InvIT IRR has been sweetened by 1.36% returns from buybacks and 1.06% returns through the InvIT issuing NCDs.
IRB Infrastructure Developers, sponsor of the InvIT, through this special purpose vehicle, primarily intends to own, operate and maintain a portfolio of six toll-road assets in the Indian states of Maharashtra, Gujarat, Rajasthan, Karnataka and Tamil Nadu. These toll roads are operated and maintained pursuant to concessions granted by the NHAI. These toll roads projects are Bharuch–Surat NH 8, Jaipur–Deoli NH 12, Surat–Dahisar NH 8, Tumkur–Chitradurga NH 4, Omalur–Salem–Namakkal NH 7 and Talegaon–Amravati NH 6.