IRB Infra is going to list India’s first ever InvIT fund IPO. In this post, I will discuss IRB InvIT Fund IPO review. But before that let’s discuss what is InvIT fund and how investors can be benefitted from this new concept?
What Is InvIT Fund?
The full form of InvIT is “infrastructure investment trust”. This InvIT is basically an investment trust of real estates OR infrastructure. This trust operates in the real estate sector and they distribute the income generated from the real estate assets in the form of dividends to the fund unitholders.
Issue Date: May 03, 2017 – May 05, 2017
Offer Price: Rs. 100 – Rs. 102 per equity share
Minimum Application: 10000 shares
Extra Application: 5000 shares
Issue Size: 535 crores at the upper price band
The fund usage would be primarily to pay the debts in the underlying SPVs of 3350 crores and the balance will be used to repay the sub-debts and the equity components of the sponsors.
About The Company:
IRB Infrastructure is headed by Mr. Virendra Mhaiskar who is the CMD of the company. The IRB group is into the development of Roads, bridges, tunnels, tolls etc.
IRB InvIT Fund IPO Review:
Part of the IPO proceeds will be invested in 6 road toll projects (3 six-lane projects and 3 4 lane projects). The trust aims to keep growing from the revenues and build more assets. The post-tax EBIDTA for the projects is likely to be more than 700 crores. So with an enterprise value (EV) of 5922 crores the projects likely to offer a starting yield of 12%, that is more than debt instrument yields. The beauty of the fund is at least 90% of the surplus cash flow will be distributed to unitholders as dividends.
This issue is clearly targetting the HNIs / FIIs and mutual funds as the minimum application is Rs. 10 lacs and then multiple of Rs. 5 Lacs. We feel that HNIs can invest in this issue for a better than average yield.