Anil Ambani-controlled Reliance Infrastructure Ltd said its RInfra InvIT Fund has received the Securities and Exchange Board of India (SEBI)’s approval for an initial public offering (IPO).
The capital markets regulator issued final observations on the public issue of the infrastructure investment trust (InvIT) this week. RInfra InvIT becomes the third such entity to receive regulatory clearance for an IPO this year.
The company had filed its draft red herring prospectus (DRHP) on 15 December 2016 to raise Rs 3,000 crore ($440 million) with an option to retain up to Rs 750 crore ($110 million) in case of oversubscription, but it later reduced the issue size by roughly $75 million.
On 5 May, RInfra re-filed the DRHP for a public issue with an aim to raise Rs 2,500 crore, retaining the green-shoe option in case of oversubscription.
Earlier this month, IRB InvIT Fund, which is sponsored by listed road developer IRB Infrastructure Developers Ltd, saw a strong investors’ response with its public offering being subscribed 8.5 times.
However, it had a lukewarm listing on the stock exchanges on 18 May. IRB InvIT Fund continues to trade below its issue price of Rs 102 apiece.
Last week, the IPO of India Grid Trust, an InvIT sponsored by power transmission asset operator Sterlite Power Grid Ventures Ltd (SPGVL), was subscribed 1.35 times on its final day. India Grid Trust’s units are scheduled to list on the exchanges on 5 June.
Reliance Infrastructure is among the six companies seeking to list an InvIT after SEBI released final guidelines for public issues of units of InvITs in May last year. MEP Infrastructure Ltd, GMR Infrastructure Ltd and IL&FS Transportation Networks Ltd are the other firms planning to list an InvIT.
Reliance’s InvIT will own 10 toll road assets with total length of 770 km across five states. It will have the option to acquire more assets in the future.
RInfra InvIT will use proceeds from the issue to cut debt taken on by special purpose vehicles (SPVs) to construct projects, according to the draft proposal.
Reliance Infrastructure develops projects through SPVs in sectors such as power, roads, metro rail and defence. The consolidated income of its InvIT project SPVs stood at Rs 542.42 crore in the six months ended 30 September 2016 compared with Rs 717.70 crore a year earlier.
Reliance Nippon Life Asset Management Ltd is the trust’s investment manager. Axis Capital Ltd, DSP Merrill Lynch Ltd, UBS Securities India Pvt. Ltd, SBI Capital Markets Ltd and Yes Securities (India) Ltd are the lead managers to the issue.