GIC- Singapore’s sovereign wealth fund will be investing ₹4,400 crore in a private Infrastructure Investment Trust controlled by IRB Infrastructure Developers Ltd. As part of the transaction, IRB will transfer nine of its BOT assets into the Investment Trust in which IRB will hold the controlling stake of 51 per cent.
The portfolio spans 1,200 km in Haryana, Uttar Pradesh, Rajasthan, Gujarat, Maharashtra and Karnataka. Three of these projects have recently become operational and the balance six are under various stages of construction. Five of the assets under construction are 4 to 6 lane projects, where tolling as well as construction has already begun. These projects are strategically located along economic corridors and across tourist hubs.
The deal was approved by the board today, following which IRB has signed binding definitive agreements with GIC for a total investment of up to ₹4,400 crore, including funding of future construction costs. The investment proceeds from GIC will be used for deleveraging of the road assets, and equity funding for under construction projects of the BOT assets.
IRB will have management control over these assets with GIC having standard rights of a financial investor and corresponding board representation. GIC will also hold 49 per cent in the Investment Manager (IM) entity formed to manage the Private Trust. The balance construction and O&M for the road projects will be executed by IRB as the project manager for the Private InvIT.
The net revenue of the nine road assets in FY 2019 was ₹630 crore. At the completion of construction, the enterprise value of the assets would be ₹22,500 crore. IRB and GIC plan to also explore future road sector opportunities in India together through the Private InvIT.
IRB Group’s overall portfolio comprises 22 projects, including 19 BOT and 3 HAM projects. The company’s order-book as on June 30 stood at ₹12,650 crore. IRB also has a listed InvIT Trust set up to own, operate and maintain a portfolio of toll roads across Maharashtra, Gujarat, Rajasthan, Karnataka, Tamil Nadu and Punjab. The aggregate value is approximately ₹7,560 crore.