irb invit Archives

An Infrastructure Investment Trust (InvIT) is an investment scheme (similar to a mutual fund) that enables individual and institutional investors to directly invest funds in infrastructure projects. These investors, who collectively invest small amounts of money in income-generating assets, receive a small portion of the income in return. These ‘assets’ could include road projects, power transmission lines, gas pipelines and much more.

We know that infrastructure firms require a steady cash flow to complete their projects. In most cases, they borrow large amounts of money from financial institutions. Thus, companies monetise their income-generating assets (through InvITs) to repay their debt obligations quickly and effectively. The funds raised through InvITs are used to pay off interest on loans and other substantial expenses. The primary objective of InvITs is to promote the infrastructure sector of a country by encouraging more individuals to invest in it.

An InvIT is established as a trust and must be registered with the Securities and Exchange Board of India (SEBI). The SEBI (Infrastructure Investment Trusts) Regulations, 2014 provides specific details regarding the registration and regulation of InvITs. Once registered, InvITs can raise funds through public or private placement and issue units to investors. In return, investors obtain a share of the annual distribution of dividends and interests. The units of such trusts are listed on the stock exchanges as a combination of both equity and debt instruments.

The minimum amount required to invest in an InvIT IPO is Rs 10 lakh. Thus, large financial institutions or high net worth individuals (HNIs) find InvITs as a profitable investment opportunity. Small retail investors would struggle to apply for such IPOs.

Types of InvITs

The first type of InvIT allows investment in revenue-generating completed projects. Firms invite investors to invest in finished projects through an InvIT IPO.

The second type of InvIT allows investors to invest in projects that are both completed or under construction.

Structure of InvITs in India

Trustee – A trustee inspects the performance of an InvIT and is certified by market regulator SEBI. They are required to invest at least 80% into infrastructure assets that generate steady revenue.

Sponsor(s) – This refers to promoters, institutions, or companies— that have a net worth of at least Rs 100 crore— which establishes an InvIT. They must hold a minimum of 25% in the InvIT with a minimum lock-in period of 3 years or as notified by any regulatory requirement. When it comes to public-private partnership (PPP) projects, sponsors serve as a Special Purpose Vehicle (SPV). [An SPV is a subsidiary company that facilitate the parent company’s financial arrangements, including leverage and speculative investments, without compromising the entire group]

Investment Manager – This refers to a limited liability partnership (LLP) or an organisation that manages investments and supervises all the operational activities surrounding the InvIT.

Project Manager – They are responsible for the execution and completion of infrastructure projects.

Prominent InvITs in India

As of February 2021, there are 13 Infrastructure Investment Trusts registered with SEBI. Let us take a look at some of the most prominent ones:

India Grid Trust

India Grid Trust (IndiGrid) is India’s first listed power sector infrastructure investment trust. It is sponsored by American global investment firm KKR & Co. and Sterlite Power Grid Ventures Ltd (SPGVL). The InvIT owns 12 operating assets, spanning over 30 transmission lines, spread across 6,740 circuit kilometers. IndiGrid also owns 9 substations with 12,290 mega-volt ampere (MVA) transformation capacity across 15 states and one Union Territory, The entity’s assets under management (AUM) are currently worth ~Rs 15,000 crore.

IRB InvIT Fund

IRB InvIT Fund is the first listed InvIT focused on toll-road assets in India. The sponsor of the trust is IRB Infrastructure Developers Ltd, one of the largest infrastructure development and construction companies in India. IRB InvIT Fund owns, operates, and maintains a portfolio of six toll-road assets in the states of Maharashtra, Gujarat, Rajasthan, Karnataka, and Tamil Nadu. These toll roads are operated and maintained through concession agreements granted by the NHAI.

National Highways Infra Trust

It has been reported that the National Highways Authority of India (NHAI) will come out with an InvIT by March 2021. It will be the first InvIT sponsored by a government entity in our country. Around six road assets worth Rs 5,000 crore have been given in-principle approval for transfer to the InvIT. This will enable NHAI to monetise its completed National Highways that have a toll collection track record of at least 1 year.

Assets to be transferred to the InvIT include the 32.6 km Kotha-Kata Bypass to Kurnool (Telangana), the 75 km-long Palanpur-Abu Road in Gujarat, the 31 km-long Abu Road-Swaroopganj in Gujarat, the 160 km Chittorgarh Kota and Chittorgarh Bypass in Rajasthan, and the 77 km Maharashtra-Karnataka border to Belgaum.

Power Grid Infrastructure Investment Trust

On January 28, 2021, Power Grid Corporation of India Ltd filed draft papers with SEBI for issuing an InvIT. The company seeks to raise more than Rs 5,000 crore to fund new and under-construction projects. This will be the first InVIT in the country to be floated by a public sector company. The offer includes a fresh issue as well as an offer-for-sale (OFS).

The trust’s initial portfolio will have transmission assets worth around Rs 7,000 crore. This includes PowerGrid Vizag Transmission Ltd, PowerGrid Kala Amb Transmission Ltd, PowerGrid Parli Transmission Ltd, PowerGrid Warora Transmission Ltd, and PowerGrid Jabalpur Transmission Ltd. The proceeds from the offer will be utilised for providing loans to the initial portfolio assets for repayment or pre-payment of debt and general expenses.

Other InvITs registered with SEBI include India Infrastructure Trust, Indian Highway Concessions Trust, IndInfravit Trust, MEP Infrastructure Investment Trust, Digital Fibre Infrastructure Trust, Oriental Infra Trust, Tower Infrastructure Trust, and Roadstar Infra Investment Trust.

HDFC Bank Q3 Results: Net profit rises 18% YoY to Rs 8,758 crore

HDFC Bank Ltd reported an 18.1% YoY increase in net profit to Rs 8,758.3 crore for the quarter ended December (Q3). It had posted a net profit of Rs 7,416.48 crore in the corresponding period a year ago. The bank’s net interest income (NII) rose 15.1% YoY to Rs 16,317.6 crore. [NII is the difference between the interest income a bank earns from its lending activities and the interest it pays to depositors]. Asset quality of the bank has seen improvement in the December quarter. It had also made provisions and contingencies amounting to Rs 3,414.1 crore in Q3.

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World’s biggest Covid-19 vaccination drive begins in India

India, on Saturday, launched one of the biggest Covid-19 vaccination drives in the world. Adequate doses of the two ‘Made-in-India’ vaccines (Covishield and Covaxin) had been delivered to all states and Union Territories in the past week. The vaccine will be administered to more than 3 lakh healthcare workers on the first day. In the first phase, which starts from January 16 and ends on February 16, around 100 people will receive shots at each of the 3,006 vaccination sites.

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Adani, GMR, Godrej, and 7 other firms in race to redevelop Mumbai CST railway station

Adani Railway Transport, GMR Enterprises, Godrej Properties, and Oberoi Realty have submitted applications for the redevelopment project for Mumbai’s Chhatrapati Shivaji Maharaj Terminus (CSMT) railway station. The CSTM redevelopment project includes segregation of arrival and departure platforms, better services for passengers, and energy-efficient buildings. The heritage site will also be restored to its 1930s levels. The redevelopment cost, including the cost of financing and contingency, is estimated at Rs 1,642 crore.

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Piramal Group wins bid for DHFL; secures 93.5% votes from CoC

The Committee of Creditors (CoC) of Dewan Housing Finance Corporation Ltd (DHFL) has voted in favour of a resolution plan submitted by the Piramal Group. The sixth round of voting on resolution plans for DHFL closed on Friday, with 93.5% of creditors voting in favor of Piramal. It has been reported that the Piramal Group offered Rs 37,250 crore as part of their settlement offer to DHFL’s creditors. They beat Oaktree Capital and Adani Group to win the bid.

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Apollo Pipes Q3 Results: Net profit rises 145% YoY to Rs 16 crore

Apollo Pipes Ltd reported a 144.83% YoY increase in net profit to Rs 16.33 crore for the quarter ended December (Q3). The company had posted a net profit of Rs 6.66 crore in Q3 FY20. Its revenue from operations rose by 28% YoY to Rs 128.1 crore. Apollo Pipes’ MD stated that the performance in Q3 was led by a robust uptick in consumption in the domestic markets. The company had also introduced cost-optimization measures during the quarter.

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BEML launches India’s first indigenously developed driverless metro car

BEML Ltd has launched India’s first indigenously designed and developed Driverless Metro Car in Bengaluru. The company will supply the metro cars to Mumbai Metropolitan Region Development Authority (MMRDA). The cars will operate on 25 kV AC traction power and will have the provision to carry passenger bicycles in the coaches. It is made up of stainless steel body and can carry 2,280 passengers in 6 cars Metro train‐set. BEML had secured a total order of 576 cars for MMRDA’s MRS1 project. The supply is scheduled progressively up to January 2024.

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Dr. Reddy’s gets DCGI approval to conduct Phase-3 clinical trials of Sputnik V in India

Dr. Reddy’s Laboratories has received approval from the Drugs Control General of India (DCGI) to conduct Phase-3 clinical trials for the Sputnik V vaccine. The trials will be conducted on 1,500 subjects as part of the randomized, double-blind, parallel-group, placebo-controlled study in India. The Data and Safety Monitoring Board (DSMB) had reviewed the data from the Phase-2 clinical trial of the vaccine and recommended Phase-3 recruitment. In its report, DSMB concluded that no safety concerns were identified, and the study met the primary endpoints of safety.

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Shoppers Stop Q3 Results: Net loss widens to Rs 25 crore

Shoppers Stop Ltd reported a net loss of Rs 25.11 crore for the quarter ended December (Q3). The company had posted a net loss of Rs 6.51 crore in the corresponding period a year ago. Its revenue declined by 27.2% YoY to Rs 746.45 crore in Q3 FY21. The company stated that business recovery during the festive period had been encouraging. Shoppers Stop was able to generate higher digital sales in Q3.

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IRFC raises Rs 1,390 crore from 31 anchor investors ahead of IPO

Indian Railway Finance Corporation (IRFC) has raised Rs 1,390 crore from 31 anchor investors ahead of its proposed initial public offering (IPO). Around 53.46 crore equity shares were allotted to anchor investors at an upper price band of Rs 26 per share. Almost 61% of the anchor portion was allotted to four domestic mutual funds- HDFC, Nippon Life, Invesco, and ITPL. The Rs 4,633-crore IPO of IRFC is set to open for subscription on January 18 (Monday) in the price band of Rs 25-26 per share.

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IRB InvIT Fund Q3 Results: Net profit rises 2% YoY to Rs 58 crore

IRB InvIT Fund reported a 2.03% YoY increase in consolidated net profit to Rs 58 crore for the quarter ended December (Q3). Its revenue stood at Rs 332.59 crore during the same period. The firm stated that toll collections were above pre-Covid levels. Electronic toll collection was in the range of 75% to 80% and is likely to go up further, as FASTags will be made mandatory from February 2021. IRB InvIT Fund is India’s first listed infrastructure investment trust (InvIT). The trust operates and maintains a portfolio of toll road concessions throughout India.

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