Mumbai: IRB Infrastructure Developers Ltd’s infrastructure investment trust (InvIT)—IRB InvIT Fund—saw subscription of 7% on the first day of its initial public offering (IPO), according to data from stock exchanges.
At the end of first day, the portion of the share sale reserved for institutional investors was subscribed 4%, while the portion reserved for high net-worth individuals and other non institutional investors was subscribed 10%.
IRB InvIT is the first infrastructure investment trust to raise funds through a public offering. The offering closes on 5 May.
On Tuesday, the trust allotted shares worth Rs2,094.5 crore as part of the so-called anchor book allocation.
The anchor book is that portion of an IPO that bankers can allot to institutional investors on a discretionary basis. Anchor book subscription opens a day before the launch of an IPO and acts as an indicator of institutional investor interest.
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Units of the trust were allotted to the anchor investors at a price of Rs102 per unit, the end of the price band for the public offering.
IRB plans to raise Rs5,033 crore from the listing of its infrastructure investment trust. The issue will consist of a fresh issue of Rs4,300 crore at a price band of Rs100-102 per unit, and an offer for sale (OFS).
The trust will own 100% in six operational build, operate and transfer (BOT) road assets.
Institutional investors who participated in the anchor book allocation included foreign investors such as government of Singapore, Schroder Asian Asset Income Fund, Deutsche Global Infrastructure Fund and Jupiter South Asia Investment Co. as well as domestic investors such as Birla Sun Life Mutual Fund, HDFC Standard Life Insurance Co. Ltd and Birla Sun Life Insurance Co. Ltd.
IRB will use about Rs3,300 crore of proceeds to repay underlying debt associated with the assets and the balance to pay back sponsor debt.
The trust will offer 12% internal rate of return (IRR) to investors.
InvITs would help repair the balance sheets of road developers and provide enough cushion for investor returns, according to a 24 April report by Kotak Securities.
“A successful InvIT listing for IRB opens up the window for other road developers to exit completed projects and churn their equity/deleverage balance sheet and would also spur interest from the NHAI (National Highways Authority of India) to award more BOT projects vs EPC (engineering, procurement, and construction)/HAM (hybrid annuity model) as bidding interest would be higher since developers would now have an exit option,” Emkay Global Financial Services Ltd said in a 24 April report.