Infrastructure Investment Trusts and Real Estate Investment Trusts are entities that invest in rent-yielding assets and distribute most of their income to shareholders as dividends. India’s capital markets regulator, the Securities and Exchange Board of India (SEBI), late last year eased regulations for REITs and InvITs to woo more investors to the country’s capital-starved property and infrastructure sector.
InvITs or infrastructure Investment Trusts are those debt instruments which be traded in the market and can act as investment vehicles for the sponsors. The listing of instruments enables promoters of infrastructure to monetise completed assets and raise funds for other long-term projects.
InvITs are proposed to provide a suitable structure for financing or refinancing of infrastructure projects in the country. They are to invest in infrastructure projects, either directly or through special purpose vehicles. In case of public-private partnership projects, such investments shall only be through SPV. At least 80% of the corpus of an InvIT fund is to be invested in completed or income-generating assets.
Engineering company IRB Infrastructure became the first firm to announce a public offer in the InvITs space. IRB InvIT Fund is a registered infrastructure investment trust under the InvIT Regulations. IRB InvIT Fund, which is sponsored by road developer IRB Infrastructure, will open its Rs 4,654.6 crore initial public offering for subscription on May 3, 2017 and closes on May 5, 2017.
The price band for the issue is fixed at Rs 100-102 per unit. Minimum application size for bidders other than anchor investors and strategic investors bidding in the anchor investor portion is Rs 10 lakh. Bid can be made for a minimum of 10,000 units and in multiples of 5,000 units thereafter.
- The Trust 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 operated and maintained pursuant to concessions granted by the NHAI. After the listing of the Units on the Stock Exchanges, they will be the first listed Infrastructure Investment trust focused on toll-road assets in India.
- The Trust’s Sponsor is IRB Infrastructure Developers Limited, one of the largest infrastructure development and construction companies in India in terms of net worth in the roads and highways sector. The Sponsor is listed on the Stock Exchanges since 2008.
- IRB Infrastructure constructs roads, highways, tunnels and bridges. It owns 22 road projects, spanning 12,000 km, of which 14 projects are operational. It has an order book of around Rs 12,100 crore.
- As of December 31, 2016, excluding the toll-road assets that are being transferred by the Sponsor to the Trust pursuant to the Formation Transactions, the Sponsor had 16 Road projects, of which 8 were “operational”, 5 were “under construction” and 3 were “under development”.
- The trust has been assigned a ‘AAA’ (stable) rating by both Care and India Ratings upto debt level of Rs 1,000 crore.
- The units will be listed on BSE and NSE.
Objects of the Issue
- Investment in the Project SPVs by way of an issue of debt.
- General purposes.
- Issue related expenses.
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