IRB InvIT Fund, which is sponsored by IRB Infrastructure Developers Ltd, plans to raise up to 43 billion rupees by selling new shares in a price range of 100 rupees to 102 rupees per share.
The first InvIT Fund is being launched by IRB Infrastructure Developers through an initial public offering (IPO) that opens on May 3 and closes on May 5.Should you invest? Another road builder that is in the queue to float an IPO of an InvIT is MEP Infrastructure Developers Ltd, which received approval from the Securities and Exchange Board of India for an offering a year ago.
IRB Infrastructure's InvIT opens for subscription on May 3.
A large concern for IRB's InvIT will be to leave enough on the table for institutional as well as retail investors. Proceeds from the IPO will be used mostly to repay the debt of its special goal vehicles (SPVs) created for toll-road projects.
The only income the Trust generates on these assets is in the form of toll collection from these road assets and interest on cash in their books. They are to invest in infrastructure projects, either directly or through special objective vehicles. According to SEBI guidelines on the issuance of InvITs, the Trust needs to distribute at least 90 percent of this distributable cash to the unit holders in the form of dividend, which will be tax free. HNIs (high networth individuals), mutual funds and foreign investors who are looking for predictable returns over a longer term and yields that are above debt instruments would find the product extremely interesting.
The Trust will replace its entire debt deployed in these six road assets with the cheaper loans. "With the InvIT, we are introducing a third dimension for fundraising", IRB Infrastructure chairman Virendra Mhaiskar told journalists in Mumbai.
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Mhaiskar added that the six operational assets have posted a compound annual growth of 11.4%. As per InvIT regulation sponsor will hold 15% units for the initial three years.
IRB's total road portfolio comprises 22 projects covering 10,000-lane kms across eight states of which 14 are already operational.
Addressing mediapersons on Tuesday, Chairman and Managing Director of IRB Infrastructure, Virendra Mhaiskar, said that in an effort to enable IRB to participate in the ever-growing opportunities of road building, it has been made a decision to unlock some of the capital in completed projects by transferring them to an infrastructure investment trust registered under SEBI regulations, which will be run by an independent board and professionals.
The company has committed an investment of about Rs 19,000 crore in its operational build-operated-transfer road assets and about Rs 11,000 crore in under-construction assets, Mhaiskar said.
Anil Ambani-led Reliance Infrastructure Ltd on Friday filed a draft proposal with the capital markets regulator Securities and Exchange Board of India (SEBI) for an.
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