IRB Infrastructure Developers , India's first listed Infrastructure Investment Trust, has successfully completed a significant fund-raising initiative, marking its first such activity since its initial public offering in 2017. The fund raised Rs 3,248.43 crore through an Institutional Placement (IP) of units, exceeding its initial target of Rs 3,000 crore.

Key Highlights of the Institutional Placement

Investor Participation and Impact

The IP witnessed strong participation from both global and domestic institutional investors, reflecting confidence in the Indian infrastructure sector and the InvIT platform. Post-allotment, key investors holding more than 5% of the units (excluding the sponsor) include:

1. Anahera Investment Pte. Ltd.
2. Kotak Mahindra Bank Limited
3. CIM Investment Fund ICAV

Strategic Acquisitions and Portfolio Expansion

The funds raised will be utilized to partly finance the acquisition of three Build-Operate-Transfer (BOT) highway assets from IRB Infrastructure Trust:

1. Hapur-Moradabad
2. Kaithal-Rajasthan Border
3. Kishangarh-Gulabpura

Post-acquisition, IRB InvIT Fund's portfolio will expand significantly:

Management Commentary

Mr. Rushabh Gandhi, Chief Financial Officer of IRB Infrastructure Private Limited (the Investment Manager of IRB InvIT Fund), stated, "The success of the Institutional Placement marks a significant milestone in our journey since IPO. The proceeds will be utilized to part fund the proposed acquisition of three revenue-generating highway assets from IRB Infrastructure Trust."

Mr. Virendra D. Mhaiskar, Chairman & Managing Director of the Sponsor, IRB Infrastructure Developers Ltd., added, "This strong response from marquee global and domestic investors is a testament to the trust and credibility that IRB Group has built over the years. The successful closure of the Institutional Placement underscores investor confidence in the Indian infrastructure growth story and in the InvIT platform."

Future Outlook

The completion of these acquisitions is expected to strengthen IRB InvIT Fund's position in the infrastructure sector. The fund will expand its footprint across multiple states, including Uttar Pradesh and Haryana. The remaining funds for the acquisition are anticipated to be secured through preferential issuance and debt financing.

This strategic move is likely to enhance IRB InvIT Fund's portfolio, potentially leading to stronger distributions and sustained value creation for unitholders. The successful fund-raise also highlights the growing investor interest in India's infrastructure sector and the maturation of the InvIT model as a viable investment vehicle.

As the infrastructure sector continues to play a crucial role in India's economic growth, developments such as this are likely to be closely watched by investors and industry observers alike.

IRB Infrastructure Developers has received approval to invest up to 7.53 billion rupees in IRB InvIT Fund. This substantial investment approval comes alongside a reaffirmation of its long-term corporate family rating (CFR) at Ba1 from Moody's Investor Service, with a stable outlook maintained. These developments serve as positive indicators for the infrastructure company, reinforcing its financial stability and growth prospects in the market.

Key Rating Details

The rating agency has also upheld the Ba2 rating for IRB Infra's USD senior secured notes, set to mature in 2032. This dual affirmation underscores the company's consistent financial performance and market position.

Recent Financial Performance

IRB Infrastructure Developers has demonstrated resilience in its recent financial performance. According to the company's latest toll revenue report:

• The gross toll collection increased by approximately 11% year-on-year.
• Total toll revenue reached ₹557.00 crore, compared to ₹502.00 crore in the previous year.

Project Portfolio and Market Position

IRB Infra maintains a substantial presence in India's infrastructure sector:

• The company, along with IRB Infrastructure Trust, manages 26 road projects.
• These projects include:
  • 18 Build-Operate-Transfer (BOT)
  • 4 Toll-Operate-Transfer (TOT)
  • 4 Hybrid Annuity Model (HAM)
• IRB Infra commands a 33% market share in the TOT space and a 14% share in the Golden Quadrilateral Project.

Management Commentary

Amitabh Murarka, Deputy Chief Executive Officer of IRB Infrastructure Developers, commented on the recent performance: "Despite the extended monsoon impacting traffic, toll revenue rose by 11%, showing notable resilience. The GST reform, announced in August and implemented in late September, caused temporary softness in goods movement, slightly moderating the upside."

Murarka also expressed optimism for the future, stating, "Looking forward, the onset festive season coupled with the GST 2.0 implementation bringing surge in economic activities are expected to maintain sustained toll revenue growth in coming months."

Investment in IRB InvIT Fund

The approval for IRB Infrastructure to invest up to 7.53 billion rupees in IRB InvIT Fund marks a significant move for the company. This investment is expected to strengthen the company's position in the infrastructure sector and potentially enhance its revenue streams.

The stable outlook from Moody's, combined with the company's strong market position, consistent revenue growth, and the newly approved investment in IRB InvIT Fund, positions IRB Infrastructure Developers favorably in India's competitive infrastructure sector. Investors and market watchers will likely keep a close eye on the company's performance in the coming quarters, especially as it navigates the evolving economic landscape post-GST reforms and leverages its new investment opportunities.