Photographer: Prashanth Vishwanathan/Bloomberg

First Private InvIT in India Aims to Raise $400 Million by July

  • IL&FS to pare debt and fund new projects from the proceeds
  • Seeing strong demand from investors for the sale: Bawa

Infrastructure Leasing & Financial Services Ltd. is seeking to raise as much as $400 million within the next six weeks through a private sale of units in an infrastructure investment trust to pare debt and fund new projects.

“We have assessed the demand and investors are comfortable with the InvITs sale,” Ramesh Bawa, managing director and CEO of IL&FS Financial Services Ltd., an investment-banking subsidiary, said in a telephone interview. “We are going ahead with the plan.”

The issue would be the first private placement of an InvIT after IRB Infrastructure Developers Ltd. and Sterlite Power Grid Ventures Ltd. completed public placements this year. Birla Sun Life Asset Management Co. has estimated that real estate and infrastructure trusts will raise as much as 600 billion rupees ($9.3 billion) this year as companies take advantage of the new funding source.

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IRB’s InvIT traded at 97.85 rupees, below the offer price of 102 rupees per unit, on Wednesday, while Sterlite’s India Grid Trust units are yet to be listed.

The structure of InvITs, designed by market regulator Securities and Exchange Board of India, is along the lines of Real Estate Investment Trusts listed across the world. InvITs offer a similar proposition where investors are able to enjoy stable returns from income-generating infrastructure assets such as roads and power transmission lines.

The private placement of such instruments provides greater flexibility to include under-construction assets at a later stage and raise further funds more easily, said Ratnam Raju Nakka, an analyst for infrastructure and project finance at India Ratings & Research Ltd.

Reliance Infrastructure Ltd., GMR Infrastructure Ltd. and MEP Infrastructure Developers Ltd. are among companies considering raising funds via the trust instruments.

Required approvals for the IL&FS sale are in place and the proceeds “will help us in deleveraging company’s debt profile and some of the proceeds would go into fresh projects,” Bawa said.

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