The company plans to raise over Rs 4,650 crore and the price band for the same has been fixed at Rs 100-102 per unit.
IRB InvIT Fund, sponsored by IRB Infrastructure, will open its Rs 4,654.6 crore initial public offering for subscription on Wednesday. The price band for the issue is fixed at Rs 100-102 per unit.
“The issue comprised of a fresh issue aggregating up to Rs 4,300 crore by the Trust,” the company had said in a statement. The issue will close on May 5 and the bid for anchor investors’ reserved proportion will be known later in the day.
An infrastructure investment trust will be allowed to raise funds from investors and direct them towards infrastructure projects or through a special purpose vehicle, according to a media report.
IRB’s InvIT (infrastructure investment trust) will be the first to get listed on the bourses. However, it is a novel product for the Indian equity investors – a hybrid instrument which is neither pure equity nor pure debt. As the company hits the primary market on Wednesday, here is all you need to know about it.
About the issue
The Rs 4,654.6 crore IPO has a price band for the issue fixed at Rs 100-102 per unit. The minimum application size for bidders other than anchor investors and strategic investors bidding in the anchor investor portion is Rs 10 lakh, the company said. Bid can be made for a minimum of 10,000 units and in multiples of 5,000 units thereafter. As per InvIT regulation, sponsor will hold 15 percent units for initial 3 years.
IRB Infra is one of the largest infrastructure development and construction companies in India in terms of net worth in the roads and highways sector. Excluding toll-road assets that will be transferred by IRB to them, IRB has 16 road projects, of which eight are “operational”, five are “under construction” and three are “under development.”
What projects are included and who are the managers?
The Trust, which has been settled by IRB Infrastructure Developers (sponsor), 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.
IDFC Bank, Credit Suisse Securities (India) and ICICI Securities are the global co-ordinators and book running lead managers to the issue. IIFL Holdings is the book running lead manager to the issue. The registrar to the issue is Karvy Computershare Private Limited.
Post fundraising plans
The proceeds from the issue will be used to repay debts, prepayment of subordinate debt given to project SPVs by the sponsor and project manager and prepayment of unsecured loans and advances availed by the project SPVs from sponsor, project manager and certain members of the Sponsor Group, according to a report by IIFL.
According to ICICI Securities, certain project SPVs have experienced losses in prior years and any losses in the future could adversely affect business. Furthermore, a decline in traffic volumes may affect business prospects, it said. And any change in tax benefits on SPVs may affect results of operations.Lastly, criminal investigations are pending against promoter, chairman, managing director of the sponsor and that could be a risk for the company.