There are reports suggesting that MEP Infrastructure is set to file draft papers for Rs 1,200 crore InvIT.
Throwing more light on the above, Jayant Mhaiskar, VC & MD, MEP Infrastructure told CNBC-TV18 that the company has received an in-principle approval for Infrastructure Investment Trust (InvITs) and that the company is evaluating two options – public or private listing.
He also confirmed that the company intends to raise Rs 1200-1600 crore under this structure and would be filing the DRHP by end of the month once the approvals from state authority and that from the central authority comes through.
He also specified that according to the InvIT structure, 51 percent of the debt has to be reduced. The current consolidated debt of the company stands at Rs 3000 crore, said Mhaiskar.
He said the company has been talking to large pension funds and insurance companies, who could be the likely investors in the InvIT.
However, some reports suggest this InvIT is drawing interest from Canada's CDPQ, CPPIB, as well as US pension funds.
On business outlook per se, he said the company is actively looking at bidding for hybrid annuity projects. The pipeline from ministry seems to be substantially and the company would be bidding for Rs 5000-6000 crore in the current quarter, and also look at fresh bidding post that.
Below is the verbatim transcript of the interview.Q: Could you give us some clarity in terms of the InvIT, what is going on on that front, how much are you looking to raise, what is the process and who all have shown interest?A: MEP Infrastructure has received in-principle approval last year from the regulator. Under that basically the company has been evaluating two options under the InvIT which is predominantly the public and the private listing.
Under the private listing as we discussed earlier, the company is allowed to consider projects, which are under construction to be part of the InvIT story. Under the public InvIT, that is as of now yet not allowed.
As far as the company is concerned, the company intends to raise anywhere between Rs 1,200 crore and Rs 1,600 crore under the InvIT structure. The company would be filing the DRHP soon once we get the approval from the regulator that is the state authority as well as the central authority.
Q: How soon will you get the state and the central authority approval or the regulatory clearances and reports go on to suggest that DRHP could be filed by the end of this month, is that a reasonable assessment according to you?A: I believe by the end of the month we should be able to file the DRHP and post which once we get approval from the regulator, we can go out on the market.
Q: You have got a debt of about Rs 2,500 crore, is that right?A: Yes, consolidated debt of the company is around Rs 3,000 crore.
Q: How does this change your books, how does this change the profitability of the company once you go ahead with this InvIT of about Rs 1,000-1,200 crore, if you could give us some numbers?A: Basically the whole concept of InvIT, which has been approved by the regulator, allows the companies to deleverage the balance sheet to a substantial reasonable number. Having said that, as per the InvIT regulation, 51 percent of the debt has to be reduced. So approximately that number goes out and parks itself in the InvIT structure which is more of a yield based kind of a return.
Q: Have you had any talks with potential investors in to the InvIT? Have you tried to gauge the kind of demand the MEP Infra InvIT is likely to have and if yes, can you give us a sense who have you spoken to already?A: Basically we have been talking to a number of large investors, which are predominantly pension funds and insurance companies who are the most likely investors in InvIT structure. Having said that, even the new guidelines by the regulator – just a couple of weeks back – allows the banks to now put money in InvIT, which is a welcome move which allows the banks also to participate in this story.
Q: How much of your promoter holding is pledged if you could give us some details and there are some BSE releases that have come off late, have you pledged some more shares? I think your total holdings is around 67-68 percent, could you tell us how much of your holding is pledged, have you pledged some more shares and if yes, why is that?A: As far as the pledge is concerned, I believe what had happened in the last couple of weeks is there has been an inter se transfer between the promoters that is the original promoters have transferred the substantial holding between the relatives that is inter se transfer before March 31 and as far as pledge is concerned, I think there has been no additional pledge which has been done in the last two months.
Q: The total pledge, the last time we had, you had around 69.5 percent stake in the company, out of that 45 percent roughly was pledged. So you are saying those numbers are as they were, you haven’t pledged some more shares?A: There is no pledge, which has happened. As far as the 45 percent number is concerned, I think I will have to confirm that.
Q: Can you tell us how many projects are you putting in the infrastructure investment trust and if you could tell us which projects?A: As far as projects are concerned, I think we will be able to give the exact details during the filing of the DRHP, which is just a month away now.
Q: When we last spoke to you, you indicated that demonetisation had an impact on your Q3 financials, if you could tell us how the January to March quarter has shaped up for the company?A: We are in the phase of having our board meeting very soon.
Q: Qualitatively if you could tell us without getting into numbers?A: Q4 definitely has seen a good pick up in terms of two things one is the revenue in terms of traffic on national highway is increasing day-by-day and also on the state projects for the company is managing. The addition to that also would be different amount of construction revenue in Q4 which has come up as a part of the hybrid annuity projects in which two of the projects have got appointed where the construction revenue is already being considered for this quarter.
Q: Give us a sense, what is the order book, the last time you told us that you were bidding for more projects, what was it, have you bid for more projects?A: Apparently post financial closure of all the six hybrid annuity projects, the company is actively looking at bidding for more hybrid annuity projects. The pipeline from the ministry is substantially large in fact in terms of number of players are less and bidding is more. Having said that, the company currently would be bidding close to around Rs 5,000-6,000 crore in the current quarter and post which we will be considering fresh bidding.
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