Latest news with #InvIT
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Business Standard
3 days ago
- Business
- Business Standard
IRB InvIT Fund acquires 3 BOT assets from IRB Infra Trust for Rs 4,905 cr
IRB InvIT Fund, India's first listed infrastructure investment trust (InvIT), has signed a binding term sheet with the IRB Infrastructure Trust—the private InvIT associate of IRB Infrastructure Developers—for acquiring its three build–operate–transfer (BOT) highway assets for a consideration of Rs 4,905 crore. A spokesperson for IRB InvIT Fund said, 'This acquisition will be a remarkable milestone, expanding our portfolio to nine projects with the addition of these three high-revenue BOT highway assets and doubling our enterprise value to over Rs 16,000 crore. Our strategy remains focused on enhancing stakeholder value, and we will continue to explore opportunities to acquire lucrative assets, structuring our public InvIT as a perpetual InvIT to ensure sustained long-term value for our stakeholders.' On 8 May, IRB InvIT Fund received a non-binding offer from the IRB Infrastructure Trust to acquire its three BOT assets—Hapur to Moradabad Highway, Kaithal–Rajasthan Highway, and Kishangarh to Gulabpura Highway—admeasuring around 1,800 kilometres, with an aggregate enterprise value of around Rs 8,450 crore and a corresponding equity value of Rs 4,905 crore. IRB InvIT Fund was formed to provide long-term, sustainable returns to unitholders by operating a portfolio of stable road assets. The proposed acquisition aligns with this strategy, as it will increase the weighted average life of the portfolio from approximately 14 years to around 17 years. 'This acquisition not only provides immediate value accretion but also establishes a clear trajectory for sustainable, long-term growth and its credentials as a robust investment platform. The platform's expanding asset base and extended portfolio life are expected to attract a broader pool of capital, further enhancing the InvIT's growth prospects,' the InvIT noted. IRB InvIT Fund is a trust settled by its sponsor, IRB Infrastructure Developers, and is registered under SEBI's InvIT Regulations, 2014.
Mint
3 days ago
- Business
- Mint
InvITs look tempting. But are they right for you?
Sixty-year-old Ram was looking for some good investment options when he came across Power Grid Infrastructure Investment Trust (InvIT). Trading at ₹86 and having a 14% yield, it appeared to be an attractive option for locking in a high income during his retirement years. After all, fixed deposits yield 6-7% interest every year, and investment-grade bonds could only reach up to 10%. Tempted by the high return, Ram decided to consult his financial advisor before making a move. 'That's not how it works," his advisor said. Understanding InvITs For starters, Infrastructure Investment Trusts or InvITs are instruments that allow investors to earn from the cash flow generated from various infrastructure assets, including roads, power generation, transmission projects, optic fibre networks. Each InvIT has an income-generating asset, and a chunk of the income earned after deducting the costs is distributed to investors. However, they are neither debt instruments, nor traditional equities. Unlike FDs or bonds, where you get the initial investment back at the end of the term, there is no principal repayment for most InvITs at the end of the tenure. The underlying project is also not owned directly by the unitholder in most cases, and it simply represents rights to collect cash flows (such as tolls) for a fixed period. To be sure, there are exceptions like warehousing InvITs, in which the underlying asset is owned by the unitholder, and the revenue will keep generating as long as the asset remains occupied. When the warehouse ages, the underlying land and the building can be sold off and distributed among investors or used to buy new assets. Also Read: How InvITs can add yield to your investment portfolio So what was the 14% InvIT yield? Power Grid InvIT had distributed ₹12 to each of its unitholders in the previous financial year. However, this amount does not represent just the interest payments but also includes a component of capital repayment. Since InvITs don't return capital to unitholders at the end of maturity, the yield is not comparable to bond yields or interest in fixed deposits. 'People confuse InvIT yield with REITs and use it interchangeably with other instruments," said Niraj Murarka, chief investment officer and head of Real Assets at 360 ONE Asset. 'Comparing it to other dividend yields would be incorrect. While interest from common bonds and FDs is pure interest, the InvITs distribution includes interest, dividend, and part repayment of the capital." The payouts in the previous financial year are also not a constant figure and tend to decline over time. For instance, toll-based road InvITs, after a certain period, will no longer have permission to collect tolls and will stop earning from it. In Reits, investors continue to own the underlying asset and the cash keeps flowing as long as the building is intact and there is an occupancy. Typically, an InvIT could have 8-20 projects, each with a different 'balance concession period,' which means that each project may have a different lifespan until when it can earn income. If there is a road asset and the license to take toll expires after a year, then the income would stop from the next year. If this road project was fetching them ₹2 every year, and if the balance concession period of this project stops, unitholders will get ₹2 less or whatever this project could have earned from next year. To be sure, InvITs can choose to buy new assets when existing Invits projects expire through equity dilution or by taking debt. Also Read: Sebi's big bet on REITs, InvITs—are we fixing what isn't broken? Discount to NAVs Ram also noticed that Power Grid InvIT was trading at ₹86 while its net asset value (NAV) stood at ₹94. Optically, it looks like it's trading at a discount of ₹8 to its fair value. He wondered if this presented a chance for capital appreciation. 'It doesn't quite work that way," replied the financial advisor. Mutual fund NAVs are straightforward. The closing price of underlying securities is tallied to arrive at the daily NAV of MF schemes. It's a relatively simple process and requires no subjectivity. It is generally considered a good representation of the underlying value of the scheme. On the other hand, InvITs' NAV is calculated quite differently. Every six months, the InvIT trustee appoints a valuation agency to arrive at the value of the underlying assets in the Invits. However, different valuation agencies use different methods and assumptions to arrive at the value of the same asset. This makes the InvIT's NAV subjective and open to interpretation compared to other kinds of NAVs, such as those used by MFs and ETFs. A host of factors can also play a role in how the market prices InvITs. For instance, traffic on a road could fall if a new, better road is constructed, and it might lead to reduced toll collection. Also read: Infrastructure Investment Trusts: How do they provide a new path for infrastructure financing? So should you invest? Murarka said retail investors may invest in InvITs through mutual funds or under the guidance of a professional financial advisor. Understanding InvITs requires a detailed study of the underlying projects, lifespan of each asset, and the cash flow potential it has. Such material can be best studied by analysts or fund managers to make an informed decision, said Murarka. Although InvITs have a low traded volume, and free float market cap ranges from around ₹2,000 to Rs.19,000 crores, retail investors investing a few lakhs shouldn't face much liquidity issues. Mutual funds can invest up to 10% in InvITs and REITs. The market regulator has proposed to increase this limit to 20% in equity and hybrid schemes. Taxation of InvITs is more complex than plain vanilla instruments, said Gautam Nayak, partner, CNK & Associates LLP. 'While the interest component is taxed in the hands of the unitholder at the slab rate, the dividend income may be taxable or tax-free, depending upon the tax rate opted for by the SPVs in which the InvIT has invested." Capital repayment is tax-free, but reduces the cost base and may get taxed as capital gains upon sale. Capital gains on sale of InvITs are at par with equities. 'It's advisable to consult a tax expert to understand the implications," Nayak added. Ram's example is hypothetical.
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Business Standard
19-05-2025
- Business
- Business Standard
IRB Infra Q4FY25 results: Net profit rises 13.7% to ₹214.72 crore
IRB Infrastructure Developers (IRB Infra), the country's biggest road operator, reported a 13.7 per cent year-on-year (YoY) increase in its net profit (after tax) for the March quarter of FY25, with profit standing at ₹214.72 crore compared to ₹188.9 crore in Q4 FY24. Further, in Q4 FY25, the Mumbai-based company's total revenue from operations stood at ₹2,149.24 crore, up by about 4.3 per cent YoY. During the quarter under review, the company's earnings before interest, taxes, depreciation and amortisation (Ebitda) declined by nearly 20 per cent YoY to ₹1,066.5 crore. In FY25, the company's revenue grew marginally by 2.8 per cent, while profit surged from ₹606 crore in FY24 to ₹6,480.7 crore in FY25, largely due to exceptional gains of ₹5,804 crore realised in Q3 FY25. Earlier, IRB Infra and its private infrastructure investment trust (InvIT) associate—IRB Infrastructure Trust—collectively registered a 23 per cent toll revenue growth in FY25 over FY24. Toll revenue for FY25 stood at ₹6,360 crore. The company noted that this toll revenue growth significantly exceeded the national YoY toll revenue growth of 12.5 per cent for FY25. Its net debt-to-equity ratio stood at 0.59x as of FY25. Currently, IRB has an asset base of ₹80,000 crore spread across 12 Indian states under the parent company and two InvITs. It holds a 10 per cent market share in pan-India toll revenue, with assets having a weighted average residual concession life of 21 years.
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Business Standard
09-05-2025
- Business
- Business Standard
Private equity, M&A drive 3x jump in real estate capital in FY25
Capital raising in India's real estate sector in the financial year 2025 (FY25) tripled to 17 deals raising ₹32,852.6 crore, from five deals raising ₹10,955.4 crore in FY24, according to Equirus Capital, a financial services firm. The sharp uptick was driven by a rise in private equity and M&A activity, both domestic and international, and an increase in average transaction value, the report stated. This boom in capital flows has been observed despite a decline in the secondary market performance of listed real estate stocks across large-, mid-, and small-cap segments—all of which underperformed the Sensex's 7.4 per cent gain over the same period. 'One of the bright spots in the market has been the real estate investment trusts (Reits), which outperformed with a 12.2 per cent return, underscoring their growing appeal,' said Vijay Agrawal, managing director, Equirus Capital. 'India's Reit and infrastructure investment trust (InvIT) markets have evolved from niche investments into core components of the country's real estate and infrastructure financing ecosystem.' Since FY20, cumulative fund mobilisations through Reits and InvITs have crossed ₹1.6 lakh crore, driven by their expanding asset base, robust institutional backing, and growing retail investor participation, the report by Equirus said. In the first month of FY26, the sector witnessed four deals worth $372 million, reflecting sustained investor confidence and appetite for real estate as an asset class, according to the report. The four deals featured Eldeco Group ($176 million), DLF Kolkata IT SEZ ($79 million), SAMHI Hotels ($88 million), and Zillion Hotels & Resorts ($29 million). 'This surge in capital raising highlights the sector's resilience, institutionalisation, and long-term growth potential, making it a focus area for PE funds, strategic investors, and capital market stakeholders alike,' added Agrawal.
Time of India
09-05-2025
- Business
- Time of India
On path to four-laning of 30k-km highways: Gadkari
New Delhi: Union minister Nitin Gadkari on Thursday said that infrastructure development is key to making India a strong economic power and that the road transport and highways ministry has taken a decision to convert 25,000-30,000 kilometres of two-lane highways into four-lane ones at an investment of ₹10 lakh crore. Speaking at the India Infrastructure Forum 2025, he said the ministry will now encourage the Infrastructure Investment Trust (InvIT) model to raise money for highway projects from Indian investors. 'To make India a strong economic power, infrastructure is key. We have taken a decision to convert 25,000-30,000 km two-lane highways into four lanes for ₹8-10 lakh crore,' he said. The road transport and highways minister further said his dream is to complete road projects worth ₹5-6 lakh crore every year. Gadkari also said the ministry is working on revising the build-operate-transfer (BOT) model for the construction of roads, under which it will collect tolls for 15 years and share part of it with concessionaires. 'We will construct highways under the BOT model but for 15 years toll will be collected by the government and we will give money to them (concessionaires) on an annuity basis,' he said, adding that the maintenance of highways for 15 years will be done by contractors. Making agriculture viable Agriculture needs to become economically viable as it is necessary to make the country 'atmanirbhar' (self-reliant), Gadkari said at the 4th International BBB Summit & Expo on Bioenergy Value Chain on Thursday. 'Indian agriculture is not very economically viable. This is the time we need to find out the solution to make it economically viable as without that, we cannot make Atmanirbhar Bharat ,' he said.
