Brookfield-backed India Infra InvIT to raise Rs 6,452 crore via debentures

Brookfield Asset Management-backed India Infrastructure Trust (India Infra InvIT) will raise Rs 6,452 crore via Non-Convertible Debentures (NCDs) to refinance debt taken to acquire the East-West gas pipeline from Reliance Industries Holdings.

The infrastructure investment trust was in the process of issuing NCDs and the proceeds will be used entirely to refinance debt maturing at the Special Purpose Vehicle (SPV) level. As such, at a consolidated level, the debt shall remain unchanged.

India Infra InvIT owns the entire stake in Pipeline Infrastructure Ltd (PIL), an SPV. It took over the East-West Pipeline (EWP), a 1,480-kilometre cross-country pipeline, from Reliance Industries Holdings Pvt Ltd on a going concern basis in 2019.

Rating agency Crisil has assigned “AAA” rating for proposed NCDs. The financial risk profile remains robust, with debt-to-value within 70 per cent, and a comfortable debt service coverage ratio (DSCR). The rating factors in the presence of a cashflow waterfall mechanism are being maintained at SPV as well as InvIT level.

Under the proposed fundraising and repayment plan, NCDs are likely to have maturity in the third, fourth and fifth year which exposes the company to moderate refinancing risk. However, a 10-year tenure for the underlying assets extending beyond the repayment tenure should help comfortably refinance the debt. India Infra is expected to prudently refinance the maturing debt and maintain its healthy debt service coverage ratio (DSCR) over the medium term, the rating agency said.

EWP is the sole pipeline connecting the gas-producing eastern coast to the western coast of India. It also connects key industrial clusters and is connected to GAIL’s trunk and other pipelines. PIL had entered into a pipeline usage agreement (PUA) with Reliance Industries Ltd for a certain capacity of the pipeline for 20 years. The arrangement will ensure steady cash flow to PIL in case actual revenue is lower, either on account of lower gas volume or tariff.

Its revenues rose to Rs 2,707 crore in FY23 from Rs 2,603 crore in FY22. Cash flow generation has improved over the nine months through the financial year 2024 on account of increased production from the KG-D6 fields.