 "Reliance Infra files DRHP for InvIT fund")
Anil Ambani-promoted Reliance Infrastructure looks to raise up to Rs 3,000 crore through its Infrastructure Investment Trust (InvIT), for which the company filed a draft red herring prospectus (DRHP) on Friday. Proceeds from the InvIT, among other liabilities, would be used to pay premiums due to the National Highways Authority of India (NHAI), the company said in its DRHP filed with the stock market regulator.
“KM Toll Road Pvt Ltd is currently in default of its premium payment obligations and the NHAI, pursuant to a letter dated July 6, 2016, has rejected KM's request for premium deferment and requested immediate repayment of all outstanding premium due, together with interest,” the company said in its DRHP.
“The management has represented that termination of concession agreement is unlikely because of following reasons. Management will use the proceeds from InvIT listing, first to pay the deferred premium along with the interest to NHAI before paying any other liability,” the DRHP said.
KM Toll Roads Pvt Ltd is one of the 10 road projects which is part of the InvIT the company plans to list and has filed a DRHP for. “Reliance Nippon Life Asset Management Limited, the investment manager to the Trust, has filed a draft offer document December 15, 2016, in relation to the initial public offer of units representing an undivided beneficial interest in the Trust with the Sebi, in accordance with the InvIT Regulations,” the company said in its statement to the BSE.
RInfra has a total road portfolio of 11 projects, of which the operational 10 projects would be part of the InvIT. The InvIT is likely to have the first right of refusal to pick the 11th road project once it is fully completed. RInfra was earlier looking to sell its road asset portfolio through a stake sale in these projects and reduce debt. In addition to the premium payments, InvIT proceeds will also help the company reduce its debt burden.
“The InvIT is likely to help reduce the company’s consolidated debt by Rs 5,500-6,000 crore. The InvIT should hit the market in the March quarter,” said an official who did not wish to be identified. The company’s consolidated debt stands at Rs 26,000 crore. The company's roads division reported revenue of Rs 237 crore in the quarter ending September 2016, 13 per cent higher than a year ago. In September, IRB Infrastructure Developers filed a DRHP with Sebi for Rs 4,300 crore initial public offering of its InvIT fund for six of its road assets. MEP Infrastructure, IL&FS Transportation Networks Ltd and Sterlite Power are some of the other companies looking to monetise assets using the InvIT route.
Infrastructure InvITs are trusts which invest in infrastructure projects either directly or through special purpose vehicles. These would allow companies to unlock tied capital in completed projects, while aiding in financing and refinancing on infrastructure projects. The intent to allow for InvITs in India for infra projects is to lower the domestic loan exposure to the sector and bring in more foreign capital.