Indian construction and infrastructure pioneer, IRB Infrastructure Developers has filed a draft red herring prospectus (DRHP) with Securities and Exchange Board of India (SEBI) for an infrastructure investment trust fund. It is one of the largest and most diversified companies which is globally acknowledged and accredited for its impeccable projects.
With the filling of the DRHP, IRB Group has emerged as the first company to raise as much as Rs.4,300 crore via it. It has had a major impact on the company’s shares which rose as much as 9.8% after the announcement by the company.
A number of benefits are offered by the InvITs to the investors. They provide a liquid method of investing in infrastructure projects as well as manage income-generating infrastructure assets. The long-term funds raised from unit-holders can help developers unlock value in their completed projects or repay debt associated with them.
It was in the year 2014 that SEBI allowed the Indian companies to launch real estate investment trusts and InvITs. The major motive behind this was to provide the bankrupt developers an easy access to funds and create a new investment avenue for institutions and high networth individuals.
Santosh Yellapu, an analyst at Angel Broking Pvt. Ltd stated that a lot of excitement will be generated among the institutional investors due to IRB’s InvIT. “Success of an InvIT will be highly dependent on what kind of yield the assets will be giving to the investors, and that yield in turn is dependent on the kind of assets being put under the portfolio. IRB has put its better quality road projects in the portfolio, which have strong operational track record and traffic growth of over 8%,” he said.
Talking about the draft, IRB Infrastructure Group stated that, “The initial public offer consists of a fresh issue of units, aggregating up to Rs.43,000 million, by the trust, and an offer for sale of units by the company and certain of its subsidiaries, namely Modern Road Makers Pvt. Ltd, Aryan Toll Road Pvt. Ltd, ATR Infrastructure Pvt. Ltd and Ideal Road Builders Pvt Ltd.”