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IRB Infrastructure InvIT raises Rs2,094.5 crore from anchor investors ahead of IPO

LiveMint logoLiveMint 02-05-2017 Swaraj Singh Dhanjal

Mumbai: IRB Infrastructure Developers’ infrastructure investment trust (InvIT) on Tuesday allotted units worth Rs2,094.5 crore to anchor investors ahead of its initial public offering (IPO) which opens on Wednesday.

The anchor book is that portion of an IPO that bankers can allot to institutional investors on a discretionary basis. Anchor book subscription opens a day before the launch of an IPO and acts as an indicator of institutional investor interest.

Units of the trust—named IRB InvIT Fund—were allotted at Rs102, the upper end of the IPO price band.

Also Read: IRB InvIT Fund: success of the issue will pave way for other infra firms

IRB plans to raise Rs5,033 crore from the listing of its infrastructure investment trust. The issue will consist of a fresh issue of Rs4,300 crore at a price band of Rs100-102 per unit, and an offer for sale.

The trust will own 100% in six operational build, operate and transfer (BOT) road assets.

The issue opens on 3 May and closes on 5 May.

Institutional investors who participated in the anchor book allocation included foreign investors such as government of Singapore, Schroder Asian Asset Income Fund, Deutsche Global Infrastructure Fund and Jupiter South Asia Investment Co. as well as domestic investors such as Birla Sun Life Mutual Fund, HDFC Standard Life Insurance Co. Ltd and Birla Sun Life Insurance Co. Ltd.

IRB will use about Rs3,300 crore of proceeds to repay underlying debt associated with the assets and the balance to pay back sponsor debt.

Also Read: Reliance Infrastructure files revised InvIT IPO with lower fund target

The trust will offer 12% internal rate of return (IRR) to investors.

InvITs will help repair the balance sheets of road developers and provide enough cushion for investor returns, according to a 24 April report by Kotak Securities.

“A successful InvIT listing for IRB opens up the window for other road developers to exit completed projects and churn their equity/deleverage balance sheet and would also spur interest from the NHAI (National Highways Authority of India) to award more BOT projects vs. EPC (engineering, procurement, and construction)/HAM (hybrid annuity model) as bidding interest would be higher since developers would now have an exit option,” Emkay Global Financial Services Ltd said in a 24 April report.

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