IRB InvIT Fund Rs 4,600-cr IPO subscribed 8.5 times

This is country's first infrastructure investment fund IPO

The initial offering of IRB infrastructure investment trust (Invit), India's first such offering, has garnered positive response from the investors. The issue was oversubscribed 8.5 times with strong demand coming from all categories of investors. Market participants said the success of IRB's Invit would encourage more infrastructure players to come up with their offerings in the next few months.

The shares reserved for the institutional investors were oversubscribed a little more than ten times with 1.4 billion bids coming against 136.9 million units on offer. On the other hand, the portion for other investors including high net worth individuals (HNIs) and corporates saw bids for 662.7 million units against 114 million on offer. The portion was oversubscribed 5.8 times.

"We are extremely with the response received for IRB InvIT IPO, the first issuance of its kind in the country. The issue saw good response from all categories of investors. This issuance opens up a new avenue in infrastructure financing introducing the concept of unit capital. We would see considerable amount of money being raised through this route in the next few months," said Shilpa Kumar, managing director, ICICI Securities - one of the book running managers for the issue.

Interestingly, the issue received a stellar response from the foreign portfolio investors (FPIs) who bid for more than 68 crore shares. Experts say, the IRB Invit has been an attractive bet for foreign investors as the product could provide yields higher than the interest rates they would get against bank deposits. Post the Lehman crisis, the interest rates in the west have been hovering lower due to which foreign funds have been on look-out for products with better yield.

The offer also saw a huge response from HNI investors, who are known for leverage investing. Market participants said the higher participation from the HNI category could be on account of anticipation of good listing day gains.

IRB plans to raise around Rs 4,600 crore through the Invit and has fixed a price band of Rs 100-102. The issue comprises of an offer for sale of nearly 34.8 million units and a fresh issue of Rs 4,300 crore.

The institutional portion of the issue was oversubscribed a little more than ten times while the portion for other investors including high networth individuals (HNIs) and corporates was oversubscribed 5.8 times. IDFC Bank, Credit Suisse Securities and ICICI Securities are the lead managers to the issue. The InvIT trust has six operational road assets and it plans to use the the proceeds from the IPO for debt repayment of its special purpose vehicles (SPVs) created for the toll-road projects.