GIC to invest Rs 4,400 crore in road platform of IRB Infrastructure

Singapore’s sovereign wealth fund GIC on Tuesday announced it would invest Rs 4,400 crore in the road platform of IRB Infrastructure Developers. 

“According to the transaction, IRB will transfer nine of its build-operate-transfer  assets to a private Infrastructure Investment Trust, in which IRB will hold controlling stake of 51 per cent,” the firm said.  

The portfolio spans across assets in Haryana, Uttar Pradesh, Rajasthan, Gujarat, Maharashtra, and Karnataka. While three of these projects have become operational, the balance six are under various stages of construction, the statement said. 

Five of the assets under construction are four- to six-laning projects, where tolling as well as construction has already begun. These projects are located along economic corridors and across tourist hubs.

After the board approved the deal on Tuesday, IRB signed binding definitive agreements with GIC for a total investment of up to Rs 4,400 Crore, including funding of future construction costs.

The investment is subject to regulatory approvals, lender consents, and other ap-plicable approvals. The investment proceeds will be used for deleveraging the portfolio and equity funding for under-construction projects.

IRB will have management control over these assets with GIC having standard and customary rights of a financial investor and corresponding board representation. 

The balance construction and operation and maintenance will be executed by IRB.

GIC will also hold 49 per cent in the investment manager entity formed to manage the private trust. The net revenue of the portfolio in the 2018-19 was Rs 630 crore. At the completion of construction, the enterprise value would be Rs 22,500 crore.

With this transaction, the portfolio will be significantly deleveraged, and IRB will get material equity support for construction completion, enhancing its project execution capabilities and increasing visibility for its EPC and O&M order book.