IPO of IRB InvIT Fund to open on May 3

The proceeds from the IRB’s InvIT IPO will be utilised mostly to repay the debt of its special purpose vehicles created for the toll-road projects

The InvIT trust has six operational road assets to begin with covering 3,000-lane km spread across five states. It comes at a price band of Rs 100-102 per unit.

IRB Infrastructure Developers Ltd, the infrastructure development and construction company, will raise a little over Rs 5,000 crore through the country's first public offer of units in the infrastructure investment trust (InvIT) space.

This will be the first Indian InvIT to be listed on the exchanges.

The issue would be available for subscription till May 5. Institutional investors will be allotted no more than 75% of the units.

IRB said it will use about Rs 3,300 crore from the total proceeds to repay debt associated with the assets and the remaining to pay back the sponsor's debt.

Anil Ambani-led Reliance Infrastructure Ltd filed a draft proposal with the capital markets regulator for an IPO of its Reliance Infrastructure InvIT Fund. GMR Infrastructure Ltd, Sterlite Power Grid Ventures Ltd and IL&FS Transportation Networks Ltd are the other companies seeking to float IPOs of InvITs.

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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. Infrastructure investment trusts are institutions similar to mutual funds that pool investment from various category of investors and invest them into completed and revenue generating infrastructure projects and thereby creating return for the investor.

The Trust will replace its entire debt deployed in these six road assets with the cheaper loans.

"We believe that the trust can offer post tax starting yield of approximately 12% to mutual funds and foreign institutional investors and approximately 10% to high net worth individuals and individuals", said Mhaiskar. The projects are, Bharuch-Surat (65-km), Jaipur-Deoli (148.77-km), Surat-Dahisar (239-km), Tumkur-Chitradurga (114-km), Omalur-Salem-Namakkal (68.62-km) and Talegaon-Amravati (66.73-km). "All the six projects have proven track record and have been operational for good number of years and have demonstrated significant CAGR of 11.4 per cent since they became operational", Mhaiskar said.

As per regulations, the sponsor - IRB Infrastructure Developers will hold 15% of the shares for an initial three years. It owns 22 road projects, spanning 12,000 km, of which 14 projects are operational. The Mumbai-based toll road developer is the sponsor of IRB InvIT Fund (trust), an infrastructure investment trust registered with the Sebi, while IRB Infrastructure Pvt Ltd is the investment manager to the trust. The capital market regulator notified the Sebi (Infrastructure Investment Trusts) Regulations, 2014 on September 26, 2014, and these trusts are likely to help facilitate investment in the infrastructure sector.

The company's InvIT size is Rs 4,300-Rs 5,032 crore.

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