IRB InvIT Fund, which is sponsored by listed road developer IRB Infrastructure Developers Ltd, made a muted stock market debut on Thursday with its units listing at a slight premium to the fund’s initial offer price before slipping.
The units of the fund opened at Rs 103.25 apiece on the BSE, up 1.22% compared with the issue price of Rs 102. The units fell to a low of Rs 99.65 before regaining a bit and closing at Rs 101.59 apiece.
The benchmark Sensex ended down 0.73% or 224 points at 30434.79 on Thursday.
The lukewarm listing of IRB InvIT Fund is in contrast to the strong investor turnout for its initial public offering (IPO) which was subscribed 8.5 times. The IPO of 250.99 million units – excluding the anchor portion – received bids for 2.14 billion units.
The fund’s listing assumes importance as IRB Infrastructure is the first company to float an InvIT after the Securities and Exchange Board of India (SEBI) notified regulations for setting up infrastructure investment trusts (InvITs) and real estate investment trusts (REITs) last year with an aim to allow the cash-strapped sectors an additional channel to raise capital.
India Grid Trust (IGT), which is sponsored by Sterlite Power Grid Ventures Ltd (SPGVL), also launched an IPO which is currently under way. Sterlite Power’s InvIT saw a slow start to its public offering on the first day on Wednesday.
Shares of IRB Infrastructure declined 5.4% or Rs 13.85 on the BSE to close at Rs 243.10 apiece. The stock has lost about 10.8% from its 52-week high seen one day prior to the opening of its InvIT fund’s public issue, stock exchange data showed.
The fund raised as much as Rs 4,655 crore (around $725 million) nearly a fortnight ago. Its public float comprised a fresh issue of units to raise Rs 4,300 crore and an offer for sale of 34.76 million units by existing unitholders in the trust.
IRB said it would use about Rs 3,300 crore from the total fundraising through the InvIT to repay debt associated with assets and the remaining to pay back the sponsor’s debt.
An InvIT is a trust that owns and manages income-generating infrastructure projects. It allows public investors to directly invest in such projects and returns a portion of the income to the investors.
IRB InvIT Fund had filed for the IPO in September last year. At least five other infrastructure companies are seeking to float IPOs of InvITs.
MEP Infrastructure Developers Ltd received approval from SEBI for the public offering of its InvIT last year. Anil Ambani-led Reliance Infrastructure Ltd re-filed a draft proposal last month with the capital markets regulator for an IPO of its Reliance Infrastructure InvIT Fund. GMR Infrastructure Ltd and IL&FS Transportation Networks Ltd are the other companies in the queue.
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.
The company has committed an investment of about Rs 19,000 crore in its operational build-operate-transfer road assets and about Rs 11,000 crore in under-construction assets.
IRB Infrastructure transferred 100% ownership of six road projects to the trust. The six assets are Bharuch-Surat road (65 km), Jaipur-Deoli road (148.77 km), Surat-Dahisar road (239 km), Tumkur-Chitradurga road (114 km), Omalur–Salem-Namakkal road (68.62 km) and Talegaon-Amravati road (66.73 km).
IDFC Bank, Credit Suisse, ICICI Securities and IIFL Holdings are financial advisers to IRB InvIT Fund’s public offering.