IRB Infrastructure Trust to offer 5 of its matured Highway Assets

IRB Infrastructure Trust, the Private InvIT, an associate of IRB Infrastructure Developers, India’s leading multinational transport infrastructure developer in the roads and highways sector, has announced a non-binding offer to transfer five matured highway assets to the IRB InvIT Fund, a publicly listed InvIT platform. The proposed transfer is subject to, amongst others, execution of definitive documents and the receipt of necessary approvals.

Commenting on the development, Virendra Mhaiskar, Chairman and Managing Director of the Sponsors, said, “This transfer is a key step in our bid, execute, stabilise and transfer (BEST) strategy, under which projects are initially developed under our private InvIT platform. Upon their completion and stabilisation, these assets are then offered to the Public InvIT platform. This process not only maximises value for all stakeholders of the IRB Group but also ensures sustained long-term benefits.”

He further added, “If completed, the transfer of these 5 assets to the Public InvIT will allow us to be self-sufficient in equity funding for upcoming sector opportunities that are being tendered by NHAI under TOT and BOT models. This is expected to drive significant growth, positioning our asset portfolio to reach Rs 1,110 billion in the coming years.”

As of September 24, the 5 assets are valued at ~ Rs 150 billion of enterprise value, as outlined in the independent valuer's report of the Private InvIT. The exact value at which these assets are proposed to be transferred to the Public InvIT has not yet been determined and will be recorded in the definitive documents. These proceeds are expected to be reinvested into upcoming opportunities in the sector, including new Build-Operate-Transfer (BOT) and Toll-Operate-Transfer (TOT) projects at accretive returns.

IRB Infrastructure Developers will continue its role as the Engineering, Procurement, and Construction (EPC) player and Operations and Maintenance (O&M) contractor for all projects within both the Private InvIT and the Public InvIT, maintaining its position as project manager. Importantly, the BEST growth strategy focuses on sourcing capital for growth through asset monetization, and the transfer of assets from the Private InvIT to the Public InvIT will not involve dilution of equity or increase in debt at the listed company level. At the Private InvIT level, stabilized projects will provide liquidity to bid for new opportunities without the need for additional equity infusion.

For the Public InvIT, the portfolio will expand with assets that have enhanced residual lives, further solidifying its position as a robust investment platform.

IRB Infrastructure Developers (IRB) is India’s first Integrated Multi-National Transport Infrastructure Developer in Roads and Highways segment. As the largest integrated private toll roads and highways infrastructure developer in India, IRB has an asset base of approx. Rs.80,000 Crs. in 12 States across the parent company and two InvITs. The company has strong track record of constructing, tolling, operating, and maintaining around 18,500 lane Kms pan India in its existence of more than 25 years in India; of which 15,500 Lane Kms are under operations at present. The group commands a market share of around 34% in the TOT space. It also comprises 12% share in India’s North South highway connectivity. After successfully completing 13 Concessions and handing over them to the nodal agencies, at present, IRB Group’s project portfolio (including Private InvIT and Public InvIT) has now 26 road projects that include 18 BOT, 4 TOT and 4 HAM projects.