Mumbai: A clutch of investors including Beijing-based Asian Infrastructure Investment Bank (AIIB), Germany’s DEG, International Finance Corporation and Indian group HEG have invested in an infrastructure investment trustNSE 6.67 %(InvIT) formed by Delhi-based infrastructure firm Oriental Structural Engineering (OSE), two people familiar with the deal said.
Oriental Infra Trust raised Rs 2,300 crore through an offer of units that opened on June 10. It attracted strong interest from global investors and was over-subscribed, said one of the people, reaffirming investor interest in operational infrastructure assets in India.
OSE, which is the sponsor of the InvIT, will hold 60% of the units.
OSE and DEG declined to comment, while IFC, HEG and AIIB did not respond to emails till press time Wednesday.
Infrastructure trusts, or InvITs, are becoming popular among investors of long-term revenue-generating assets like toll roads and power-transmission projects.
Currently, there are three listed InvITs — IRB InvIT Fund (by IRB Infrastructure Developers), IndiGrid InvIT Fund (Sterlite Power Grid Ventures) and IndInfravit, sponsored by L&T Infrastructure Development Projects. Canada’s Brookfield, which has bought the loss-making East West gas pipeline of Mukesh Ambani for $2 billon, also plans to list it as an InvIT.
Oriental Structural Engineering is engaged in the construction of runways, highways and bridges. It takes up projects under engineering-procurement-construction and build-operate-transfer contracts.
Its InvIT consists of five highways: Nagpur Bypass, Indore-Khalghat (NH3), Etawah-Chakeri (Kanpur), Hungund-Hospet (NH-13) and Nagpur-Betul Highway. These highways have a length of 2,804 lane kms, and their combined revenue was about Rs 1,700 crore in fiscal 2019.
“OSE has another $1 billion of highway assets which are also available to Oriental InvIT for acquisition under the ROFO (right-offirst-offer) agreement. This would lead to an assured 50% increase in the size of Oriental INVIT in the next few years,” said the second person.
EY is the investment banking adviser to the sponsor, while ICICI Securities is the merchant banker in this transaction. Spokespeople for both declined to comment.
InvITs enable a large number of investors to pool their money for investments into infrastructure assets in return for regular dividends. InvITs invest in operational infrastructure assets such as roads, telecommunication towers and power plants.
Since the operating infrastructure assets provide stable and longterm yields under the InvIT structure, global investors have been keen on such entities floated by Indian developers.
Global PE major KKR & Co, along with Singaporean sovereign wealth fund GIC, had picked a large stake in IndiGrid. IndInfravit saw the participation of CPP Investment Board, which had subscribed to 30% of its units for $152 million, and Allianz Capital Partners that acquired 25% of the units for $128 million.
Last month, CPPIB and Piramal Enterprises announced their plan to set up India’s first renewable energy-focused InvIT to raise $600 million and buy operational assets.