Thursday, 18 August 2016

Infrastructure companies planning to mop up funds through Infrastructure Investment Trusts (InvITs)

IRB Infrastructure Developers is planning to raise ₹5,000-6,000 crore, expected to file the DRHP within a month. IRB intends to use the proceeds mainly to fund new road projects it intends to bid for and also for existing ones. The company would also be bringing its six NHAI toll road projects, valued at ₹7,000-8,000 crore, into the trust. The company has mandated Deutsche Bank, Credit Suisse and IDFC Bank as merchant bankers for InvITs, sources close to the development told BusinessLine.
Other players are in the queue
Companies such as Adani Group, GMR Infrastructure, IL&FS Transportation Networks and L&T are also understood to be looking at InvITs to raise funds. Sterlite Power Transmission, a company that was demerged from Sterlite Technologies, is also planning to file the DRHP for InvITs by September. SPTL had filed an application for InvITs with SEBI in June. According to the sources, it was planning to raise ₹2,500-3,000 crore.
About InvIT
IRB fund raising could be the first fund-raising through an InvIT after it was first proposed in the Union Budget in 2014. In this year’s Budget speech, Finance Minister had proposed that any distribution made out of income of a SPV to InvITs having specified shareholding will not be subjected to dividend distribution tax, giving a much-needed fillip to the trust.
InvITs, much like mutual funds, enable individuals to pool investments into the infrastructure sector and earn a return on the income (after deducting expenditure). InvITs can invest in infrastructure projects, either directly or through SPVs, while in case of public-private partnership projects, such investments can be made only through SPVs.In India, InvITs are regulated by SEBI and are mandated to be listed.

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