Mumbai-based road and infrastructure operator Shrem Group is planning to raise ₹600 crore through an initial public offering of its Shrem Infrastructure Investment Trust (Shrem InvIT), which will open for subscription this month.

The IPO will be a fresh issue of 6 crore units of ₹100 each and the firm will use the proceeds to pare debt.

Shrem InvIT, an infrastructure investment trust floated by Shrem Infra Structure, has an enterprise value of about ₹7,000 crore. Post the floatation, Shrem Infra will retain about 86 per cent stake in the InvIT.

Offer by month-end

“The issue will comprise about 15 per cent of the total units held by the trust. We are expecting to get SEBI approvals this week, following which we will be launching the IPO. The IPO is expected to hit the market this month for subscription and an immediate listing on the NSE,” Shrem Infra Chairman and Managing Director, Nitan Chhatwal, said.

“Earlier, we had a single A (A) and a double A (AA) rating at special purpose vehicle (SPV) levels and now that we have consolidated our debt at the InvIT level, we have got a triple A (AAA) rating. So, our cost of funding goes down and handling of cash flow becomes proper. In future, whenever we want to add more projects, it becomes very cost-effective,” he added.

The company is also in advanced stage of raising debt of about ₹3,400 crore from State Bank of India.

ICICI Securities is the manager of the issue.

The subscription to the InvIT is restricted to institutional investors with a minimum bid of ₹26 crore. However, the minimum bid amount would be reduced to ₹2 crore after listing, and it would be available to all class of investors.

To double AUM

The group has a debt of about ₹4,000 crore as of March 31, 2021. The company will use the proceeds to repay debt of about ₹600 crore, and move the remaining debt from SPV to the InvIT. The company is also looking to double its Assets Under Management in the next 3-5 years.

At present, the company has about ₹7,000 crore of AUM of fully completed road assets. According to sources, institutional investors such as Life Insurance Corporation of India, Nippon MF, HDFC and family offices have already evinced interest in the InvIT IPO. Chhatwal declined to comment on the names, but added that there was interest from large investors.

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