IRB InvIT IPO fully subscribed on final day

IRB InvIT Fund IPO received bids for 490 million shares versus the 251 million shares offered, helping raise Rs5,040 crore

The IRB InvIT Fund will own and operate six toll road assets across five Indian states. Photo: iStockphoto
The IRB InvIT Fund will own and operate six toll road assets across five Indian states. Photo: iStockphoto

Mumbai: IRB Infrastructure Developers Ltd’s infrastructure investment trust (IRB InvIT) fund was subscribed 8.57 times on the final day of its initial public offering (IPO), according to data from stock exchanges.

As of 7pm, the portion of the share sale reserved for institutional investors was subscribed 10.81 times, while the portion reserved for high net-worth individuals and other non institutional investors was subscribed 5.89 times.

IRB InvIT is the first infrastructure investment trust to raise funds through a public offering.

“This is indicative of the trust and confidence shown by them (investors) in IRB Infra, which has a proven track record of successfully executing large BOT (build, operate and transfer) projects across all terrains of the country,” said Virendra Mhaiskar, chairman and managing director of IRB Infrastructure.

Earlier, on Tuesday, the trust allotted shares worth Rs2,094.5 crore as part of the so-called anchor book allocation.

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 were allotted to the anchor investors at Rs102 per unit, the top end of the price band for the public offering.

Institutional investors who participated in the anchor book allocation included foreign investors such as the 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.

The successful public offering will help IRB raise around Rs5,033 crore, including primary capital of Rs4,300 crore.

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

The trust will own 100% in six operational BOT road assets. It will offer 12% internal rate of return to investors.

InvITs would 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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