Despite first distribution from two infrastructure investment trusts, many players delay launch

Even after the first two infrastructure investment trusts (InvITs) announced their maiden dividend distribution which, according to analysts, is in line with promised yields, it may take time for more InvITs to come to the market.

IRB InvIT Fund, sponsored by IRB Infrastructure Developers, last week announced dividend distribution of ₹90 crore (which accounts for 94 per cent of the distributable cash flow) to the unit-holders at ₹1.55 a unit.

According to the IRB Infrastructure spokesperson, this translates into an annualised payout of 12.6 per cent, which is in line with the company’s expectations. For the quarter ended June 20, IRB InvIT reported revenue of ₹151 crore. The distribution announced is for 44 days from the date of listing, the company noted.

IndiGrid Trust, an InvIT sponsored by Sterlite Power, had earlier announced distribution of 0.92 paise a unit to unit-holders for one month of operations. Both InvITs decided to switch from bi-annually to quarterly distribution.

“Other infrastructure players seem to be in the wait-and-watch mode at the moment as the first two InvITs are not really performing well,” Ratnam Raju N, Associate Director — Infrastructure & Project Finance at India Ratings & Research told BusinessLine .

Both IRB InvIT Fund and IndiGrid Trust continue trading below their issue prices since they were listed on the exchanges.

When IRB InvIT debuted in May this year, market analysts noted that by offering 12 per cent internal rate of return (IRR) to investors it had set an optimistic benchmark which other players in the market will have to consider when launching their InvITs.

They also suggested that other infrastructure developers would like to watch the debutants for one or two quarters, at least until the first two InvITs make their maiden dividend payments to unit-holders post which the confidence in the instrument is likely to increase.

“Investor interest in InvITs is expected to increase once the InvITs make their first cash distribution and the InvIT sponsors demonstrate their ability to identify and add the right kind of assets over time,” Sudip Sural, Senior Director, Infra & Public Finance, Crisil Infrastructure Advisory told BusinessLine . This is expected to attract more players to come forward with their issues, he added.

Several infrastructure developers had earlier announced launching their InvITs. “We are getting the authority’s approval by the end of the week, post which we should be able to file the DRHP in the next 15 to 30 days. So, by September quarter we should be there in the market,” Jayant D Mhaiskar, Vice-Chairman & Managing Director, MEP Infrastructure Developers, said.

According to the Reliance Infrastructure spokesperson, the ₹2,500-crore RInfra InvIT Fund will be launched shortly.

Ramesh Bawa, MD and CEO of IL&FS Financial Services had earlier this month said in an interview with BusinessLine that the company was looking to raise up to $300-400 million through an InvIT issue, eyeing July-end as the deadline for this transaction.

L&T’s CFO R Shankar Raman noted last week that the group is still exploring the option of going through the InvIT route, although no final decision on this has been taken yet.