Global Investors Back Oriental Structural’s Infra Investment Trust
Global Investors Back Oriental Structural’s Infra Investment Trust Reporting By Sanjit Bakshi
A group of investors, including the Asian infrastructure investment bank (AIIB) based in Beijing, the German SDR, the International Finance Corporation and the Indian HEG group, have invested in an infrastructure investment trust SNE 1.47% (InvIT) formed by the infrastructure company Oriental Structural Engineering (OSE) based in Delhi), said two people who were familiar with the agreement.
Oriental Infra Trust raised Rs 2.3 billion rupees through an offer of units that was opened on 10 June. It attracted considerable interest from international investors and was over-subscribed, one of the people said, and reaffirmed the interest of investors in operational infrastructure assets in India.
OSE, the sponsor of InvIT, has 60% of the units.
OSE and DEG refused to comment, while IFC, HEG and AIIB did not respond to emails until the time of publication on Wednesday.
Infrastructure trusts, or InvIT, are becoming popular with investors of long-term income that generate income, such as toll roads and energy transfer projects.
There are currently three InvITs listed: IRB InvIT Fund (from IRB Infrastructure Developers), IndiGrid InvIT Fund (Sterlite Power Grid Ventures) and IndInfravit, sponsored by L&T Infrastructure Development Projects. Canada’s Brookfield, which purchased the West West Mukesh Ambani gas pipeline with losses of $ 2 billion, is also planning to include it as InvIT.
Oriental Structural Engineering is dedicated to the construction of tracks, highways and bridges. Assumes projects under contracts for engineering-acquisition-construction and construction-operation transfer.
Your InvIT consists of five roads: Nagpur Bypass, Indore-Khalghat (NH3), Etawah-Chakeri (Kanpur), Hungund-Hospet (NH-13) and Nagpur-Betul Highway. These roads have a length of 2,804 kilometers of lanes and their combined income amounted to around Rs 1,700 million in the fiscal year 2019.
“OSE has another $ 1 billion in road assets that are also available for Oriental InvIT for acquisition under the ROFO agreement (right offer). This would lead to a guaranteed increase in the size of Oriental INVIT by 50% in the coming years, “said the second person.
EY is the investment bank advisor of the sponsor, while ICICI Securities is the commercial banker in this transaction. The spokesmen of both refused to comment.
InvITs enable a large number of investors to raise their money for investments in infrastructure assets in exchange for regular dividends. InvITs invest in operational infrastructure assets such as roads, telecommunications towers and power plants.
Since operational infrastructure assets offer stable and long-term returns under the InvIT structure, global investors are interested in Indian entities that generate such entities.
The most important global physical education company, KKR & Co, together with the Singapore GIC state investment fund, have chosen a large stake in IndiGrid. IndInfravit had the participation of CPP Investment Board, which had subscribed for $ 152 million in 30% of its units, and Allianz Capital Partners, which had 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 purchase corporate assets.
