IRB InvIT Fund, which is sponsored by listed road developer IRB Infrastructure Developers Ltd, saw a slow start to its public offering on Wednesday.
The public offer—which comprises 250.99 million units, excluding the anchor portion—received bids for 16.61 million units, stock exchange data showed.
As per regulations, retail investors are not permitted to participate in the issue as InvITs are a new financial concept in India and are yet to be tested in the market. Institutional investors will be allotted not more than 75% of the units.
The quota of units reserved for institutional buyers was subscribed around 4% while the portion set aside for non-institutional investors, who include corporates and rich investors, was subscribed 10%.
On Tuesday, IRB InvIT Fund raised Rs 2,094.46 crore (around $326.24 million) through the sale of units to anchor investors.
The fund allotted 205.34 million units to 23 institutional investors at Rs 102 per unit, the upper end of the Rs 100-102 price band.
Investors who acquired units ahead of the first public offering of an infrastructure investment trust (InvIT) in India include Singapore’s sovereign wealth fund GIC, Monetary Authority of Singapore, Australia’s Platinum Asset Management, Singapore’s Schroder Investment Management and UK’s National Westminster Bank.
VCCircle had reported that GIC was among the marquee global investors lining up to take part in the public issue of IRB InvIT Fund.
Anchor investors are institutional investors who accept a one-month lock-in period for a sizeable allocation of securities and support a public offering. Their participation highlights investors’ confidence in a public offering and sets a benchmark for the investor community at large.
The strong interest from anchor investors gains importance as IRB Infrastructure becomes the first road developer to float an InvIT, a tool first proposed by the capital markets regulator Securities and Exchange Board of India (SEBI) over three years ago, though tax issues and regulatory hurdles led to delays.
IRB’s InvIT Fund is seeking to raise as much as Rs 4,655 crore (around $725 million) through the public offering.
The offering comprises 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 Infrastructure said it will use about Rs 3,300 crore from the total proceeds to repay debt associated with its assets and the remaining to pay back the sponsor’s debt.
Shares of IRB Infrastructure declined 0.79% on the BSE to close at Rs 264.70 apiece on Wednesday. The stock touched a 52-week high of Rs 272.40 per share during the day. It has advanced 10% in the last one month.
IRB InvIT Fund had filed for the IPO in September last year Another road builder that is in the queue to float an IPO of an InvIT is MEP Infrastructure Developers Ltd, which received the approval from SEBI for an offering last year.
Anil Ambani-led Reliance Infrastructure Ltd filed a draft proposal with the capital markets regulator for an IPO of its Reliance Infrastructure InvIT Fund. GMR Infrastructure Ltd, Sterlite Power Grid Ventures Ltd and IL&FS Transportation Networks Ltd are the other companies seeking to float IPOs of InvITs.
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.
SEBI had last year notified regulations for setting up InvITs as well as real estate investment trusts (REITs) to allow the cash-strapped sectors an additional channel to raise capital.
InvITs are proposed to provide a suitable structure for financing or refinancing infrastructure projects in the country. They are expected to invest in infrastructure projects, either directly or through special purpose vehicles. At least 80% of the corpus of an InvIT fund should be invested in completed or income-generating assets.