Capital Infra Trust InvIT to Launch IPO for Subscription Starting January 7, 2025
The initial public offering (IPO) of Capital Infra Trust InvIT is set to open for subscription on January 7, 2025. The price band for the IPO is between Rs 99 and Rs 100 per unit, and the company aims to raise up to Rs 1,578 crore through the issue. This IPO is expected to attract significant attention from both institutional and non-institutional investors, marking a key event in the Indian infrastructure sector. The InvIT will be listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), with BSE acting as the designated stock exchange.
Capital Infra Trust InvIT is offering its units through a book-building process, which will help determine the final price of the units. Under the offer, up to 75% of the units will be available for allocation to institutional investors, while no less than 25% will be available for non-institutional investors. This distribution method ensures that both large investors and smaller retail investors have an opportunity to participate in the offering.
The trust received a "Provisional CRISIL AAA/Stable (Assigned)" rating from CRISIL Ratings Limited on December 31, 2024. This rating signifies the trust's strong credit quality and stability, which enhances investor confidence in the offering. A high credit rating is essential for ensuring the trust's long-term financial health and for reassuring investors about the reliability of the returns.
The main objective of the Capital Infra Trust InvIT is to acquire, manage, and invest in revenue-generating infrastructure assets, particularly roads. The initial portfolio of assets consists of nine completed roads, all of which are operational and have been built under concessions granted by the National Highways Authority of India (NHAI). These roads are located in various states, including Haryana, Rajasthan, Bihar, Uttarakhand, Himachal Pradesh, Madhya Pradesh, and Karnataka, covering a total distance of 682.425 kilometers.
As of September 30, 2024, the average residual concession life of the portfolio assets is 11.7 years. This provides a substantial period for the trust to generate revenue from tolls collected on these roads. The trust is also entitled to acquire new projects through a Right of First Offer (ROFO) agreement with the sponsor, which could further expand its portfolio in the future.
The net proceeds from the IPO will be used in several ways. First, a significant portion of the funds will be directed towards providing loans to the Project Special Purpose Vehicles (SPVs) for the repayment or prepayment of their outstanding loans. These loans include accrued interest and any prepayment penalties. Second, the funds will also be used to repay unsecured loans that the SPVs have taken from the sponsor. These measures are aimed at ensuring that the SPVs can continue to operate efficiently and meet their financial obligations.
The IPO is being managed by two prominent financial institutions: SBI Capital Markets Limited and HDFC Bank Limited. These firms have extensive experience in handling large-scale public offerings and have played a crucial role in structuring and managing the issue. KFin Technologies Limited has been appointed as the registrar for the issue, while Axis Trustee Services Limited has been named as the trustee for the trust. Gawar Investment Manager Private Limited will manage the investments for the trust, and Gawar Construction Limited will serve as the sponsor.
The offer opens to institutional and non-institutional investors, who will have the opportunity to buy units in the trust and share in the potential revenue generated by the tolls from the roads in the trust’s portfolio. This gives investors an opportunity to benefit from India’s growing infrastructure sector, which is a key area of focus for the government.
