IRB InvIT Listing Makes For Efficient Equity Distribution Among Projects, Says Mhaiskar

The infrastructure developer became the first privately placed InvIT to list on the NSE on Monday. The company is also looking to use the listing to bring down the debt levels of the InvIT, Mhaiskar said.

"The InvITs in itself, backed by market investors, provide you with a platform where you can bring in strengths from other investors to lower your equity investment in the project," Mhaiskar said. This makes the firm eligible for doing more projects because the company can infuse more equity into more projects thanks to backing from financial investors.

"It also brings in more transparency and discipline in the bidding itself. The execution of all these projects and the margins arising out of the execution exercise will accrue to the IRB, and the long-term return, on which the equity on this project is invested, will be to the credit of the unitholders," he said.

While IRB Infrastructure Trust's listing will bring more transparency and disclosures from an investor's perspective for the public to understand the product, it will also allow the InvIT to tap the bond market.

The infrastructure developer became the first privately placed InvIT to list on the NSE on Monday. The company is also looking to use the listing to bring down the debt levels of the InvIT, Mhaiskar said.

"The InvITs in itself, backed by market investors, provide you with a platform where you can bring in strengths from other investors to lower your equity investment in the project," Mhaiskar said. This makes the firm eligible for doing more projects because the company can infuse more equity into more projects thanks to backing from financial investors.

"It also brings in more transparency and discipline in the bidding itself. The execution of all these projects and the margins arising out of the execution exercise will accrue to the IRB, and the long-term return, on which the equity on this project is invested, will be to the credit of the unitholders," he said.

While IRB Infrastructure Trust's listing will bring more transparency and disclosures from an investor's perspective for the public to understand the product, it will also allow the InvIT to tap the bond market.

Access to the bond market will bring a lot of efficiency to financing the downstream projects in the InvIT's portfolio, said Mhaiskar. But the primary objective is to bring down debt levels instead of adding to them.

"We are not looking at raising additional debt. We wanted the InvIT structure to have very minimal debt and have a very robust structure. If you look at the enterprise value of private InvIT today, it's almost Rs 27,000 crore. And, if you look at the debt profile, it's hardly Rs 10,000 crore. So it's not a very highly levered product. The idea is not to take on more debt...the the idea is to reprice the existing Rs 10,000 crore downwards," the IRB Infrastructure CMD said.

As the projects in the IRB Infrastructure Trust portfolio are long-term with long concessions, it can look at shifting the amortisation back and having a higher cash release up front, said Mhaiskar. All this while maintaining long-term cash flow visibility for investors.

"Whether it is insurance or pension, the guidelines are all very much there. They can certainly participate in these modern issuances, and it actually works well for them because these are long-term concessions with long-term cash flow visibility, and it's a regulated business... It's a perfect fit for anyone who's wanting to have a good yield play with long-term visibility," Mhaiskar said.