IRB InvIT Fund, which is sponsored by listed road developer IRB Infrastructure Developers Ltd, saw a strong investors’ response to its public offering as the issue was subscribed 8.5 times on the third day on Friday.
The public offer – which comprises 250.99 million units excluding the anchor portion – received bids for 2.14 billion units, stock exchange data showed.
The IPO opened on a slow note and was subscribed a little over 6% on the first day on Wednesday.
The investment trust saw subscription to its public issue cross the halfway mark on the second day on Thursday.
On Friday, the quota of units reserved for institutional buyers was subscribed around 11 times, stock exchange data showed.
The portion set aside for non-institutional investors, who include corporate and rich investors, was subscribed 5.85 times of the units reserved for them.
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 no more than 75% of the units.
“It is a milestone issue in India’s capital markets as it is the first one in the InvIT space. The issue also saw the culmination of efforts by the government and regulatory authorities, who removed hurdles and helped launch the first ever InvIT in the country. High-quality investors participated in the public issue and it is encouraging to see such demand given the large issue size,” said Mridul Mehta, executive vice president, ICICI Securities.
IDFC Bank, Credit Suisse, ICICI Securities and IIFL Holdings are financial advisers to the firm for the public offering.
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, stock exchange data showed.
Anchor investors are institutional investors who accept a one-month lock-in period for a sizable 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.
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 unit holders in the trust.
IRB Infrastructure said it will use about Rs 3,300 crore from the total proceeds to repay debt associated with the assets and the remaining to pay back the sponsor’s debt.
Shares of IRB Infrastructure declined 3.16% on the BSE to close at Rs 256.25 apiece on Friday. The benchmark Sensex declined 0.89% or 267.41 points to end at 29,858.80.
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.