IRB plans to set up infrastructure investment trust to raise funds

IRB Infrastructure Developers Ltd, a Mumbai-based firm engaged in construction and infrastructure development, has received its board approval to form infrastructure investment trust (InvIT), according to a stock market disclosure.

This will be a first-of-its-kind infrastructure investment trust by an Indian firm and will allow it to sell or transfer its whole or substantial shareholding in special purpose vehicles (SPVs) and monetise assets.

Securities market regulator SEBI had last year notified its regulations for setting up InvITs as well as real estate investment trusts (REIT) to allow the cash-strapped sectors an additional channel to raise fresh capital.

InvITs are proposed to provide a suitable structure for financing/refinancing of infrastructure projects in the country. They are to invest in infrastructure projects, either directly or through SPV. In case of PPP projects, such investments shall only be through SPV.

At least 80 per cent of the corpus of InvIT is to be invested in completed or income generating assets for InvITs issuing public units, strategic investors are to bring at least 5 per cent of the amount and InvITs offer size need to be at least Rs 250 crore and that the proposed holding of an InvIT in the underlying assets shall be not less than Rs 500 crore (click here for more on that).

IRB Infrastructure Developers is into various engineering and construction projects including roads, highways, tunnels and bridges.

Public-listed IRB's order book currently stands at around Rs 12,100 crore of which Rs 10,270 crore worth orders are to be executed in three to four years.

IRB Infrastructure Developers' scrip closed at Rs 249.70, up 6.03 per cent each on BSE in a strong Mumbai market on Friday.

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