IRB InvIT Fund will become IndiaÂ’s first such fund. Currently, IRB has road assets close to Rs 30,000 crore (Rs 19,000 crore are operational; Rs 11,000 crore is under construction).
The total road portfolio of IRB is 12,000 km, made up of 22 projects, spread across eight states.
Through this InvIT, IRB is looking to offer six road projects, having total capital employed of about Rs 5,800 crore-Rs 6000 crore, out of the total 14 operational road assets, employing close to Rs 16,000 crore of capital.
The reason why this InvIT assumes importance is because these six road projects employ equity and sub-debt of around Rs 2,600 crore, and debt of close to Rs 3,300 crore. With this new structure, should the debt get transferred to the trust, it would bring down overall debt at the parent level.
Post the new structure, the debt-to-equity ratio of the company is expected to fall to 1.7 times; in addition, there will be savings on interest costs. Around Rs 5,900 crore worth of projects will be on the block for this InvIT. The rest will have six projects to begin with, spread across 3,900 km of assets.
Totally, the company will raise around Rs 5,035 crore, of which in the first tranche will raise Rs 4,300 crore. A total of Rs 3,555 crore will be utilised to retire debt, and the rest will be utilised for sponsors. All these assets have operational Internal Rate of Return (IRR) of 11.4 per cent. However, the company is expecting an IRR of 12.4 per cent