Bharat Highways InvIT IPO: The initial public offering (IPO) of Rs 2,500 crore by Bharat Highways InvIT will begin with bidding on Wednesday, February 28, and be open for subscription until Friday, March 1. The fixed pricing range for the units offered by Bharat Highways Infrastructure Investment Trust (InvIT) is Rs 98–100 per unit. Investors may submit applications for up to 150 units, then in multiples of that number.
Bharat Highways Infrastructure Investment, an infrastructure investment trust, was established to acquire, manage, and invest in a portfolio of Indian infrastructure assets. Operating within the guidelines of SEBI InvIT Regulations, the trust is authorized to conduct the operations of an infrastructure investment trust.
Brokerage firms closely monitoring the matter generally hold a positive outlook, pointing to the company’s improving leverage position, appealing valuations, robust portfolio, and promising prospects for future growth. However, they underscore several notable risks associated with the venture, including the lack of an established operating track record, concerns regarding debt levels, challenges in seizing growth opportunities, and the upward trajectory of operational costs.
The lender intends to utilize the net proceeds from the fresh equity issue to repay or prepay loans to the Project SPVs, thereby bolstering the InvIT’s leverage position, explained StoxBox. Considering the current price-to-book value multiple of 0.8 times as of September 2023, we deem the company to be reasonably valued. Consequently, we recommend investors subscribe” to the issue with a long-term perspective, the statement concluded.
The brokerage highlighted a significant risk about the InvIT being a newly established trust without an established operational track record. This factor presents challenges in accurately evaluating its future growth potential. Furthermore, the brokerage cautioned that the failure or inability of the InvIT to identify and acquire new infrastructure assets capable of generating comparable revenue, profits, or cash flows could adversely impact its business.
Bharat Highways InvIT aims to raise a total of Rs 2,500 crore through its primary offering, which involves the sale of 25 crore fresh units. This funding initiative encompasses a sponsor contribution of Rs 664.5 crore by Aadharshila Infratech. Furthermore, IDBI Trusteeship Services has been appointed as the trustee overseeing the issue.
A maximum of 75 percent of the offer size has been allocated to qualified institutional bidders (QIBs), ensuring broader participation from this segment. Meanwhile, non-institutional investors (NIIs) are guaranteed a minimum of 25 percent of the total issue, promoting inclusivity in the investment process. For bidders other than anchor investors, the minimum bid size stands at Rs 15,000, maintaining a threshold for participation.
Bharat Highway InvIT aims to procure and oversee a collection of infrastructure assets across India, primarily concentrating on road projects. Backed by its sponsor and associate, the company plans to augment its portfolio through strategic acquisitions, which may include assets available through a right of first offer agreement, as highlighted in Arihant Capital Markets’ IPO note.
“The government has set an ambitious goal of constructing 100 kilometers of highways daily, alongside plans to develop 65,000 kilometers of national highways, with a focus on bolstering public investment. This prioritization of infrastructure development is evident through initiatives such as BharatMala Pariyojana. However, the note also acknowledges challenges posed by fluctuations in interest rates and inflation, as well as the reliance on government assistance. Despite these challenges, the note recommends a’subscribe’ rating,” it concluded. Baroda BNP Paribas MF Aditya Birla Sun Life,
Bharat Highways InvIT successfully secured a total of Rs 825.97 crore from anchor investors, with an allocation of 8,25,97,350 units at the issue price of Rs 100 each. Noteworthy participants in the anchor books encompassed prestigious entities such as Societe Generale, ICICI Prudential Mutual Fund (MF), HDFC MF, Kotak MF, Quant MF, Nippon Life India, Axis MF, Baroda BNP Paribas MF, UTI MF, Aditya Birla Sun Life, and DSP MF, among others.
The net proceeds generated from the issue will be directed towards extending loans to the project SPVs, facilitating repayment or prepayment, either partially or entirely, of their existing outstanding loans. Moreover, the funds will be earmarked for general corporate objectives.
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The portfolio comprises seven roads, all operating under a hybrid annuity model (HAM) in states like Punjab, Gujarat, Andhra Pradesh, Maharashtra, and Uttar Pradesh. These roads are managed and maintained under concession rights granted by the NHAI and are owned and operated by the Project SPVs, which are presently fully owned by GR Infra.
For the period ending in September, the InvIT disclosed a profit after tax of Rs 101.35 crore, alongside revenue totaling Rs 388.54 crore. In contrast, its financials for the fiscal year ending on March 31, 2023, revealed a bottom line of Rs 527.05 crore with revenue amounting to Rs 1,537.47 crore.
InvIT has additionally established a ROFO (Right of First Offer) agreement with GR Infra, granting it priority access to certain assets owned and under development by GR Infra. The InvIT’s creditworthiness has been reaffirmed with a CRISIL AAA/Stable rating by Crisil Ratings, a provisional CARE AAA, a Stable rating by CARE Ratings, and a provisional IND AAA/Stable rating by India Ratings and Research.
ICICI Securities, Axis Bank, HDFC Bank, and IIFL Securities have been appointed as the book-running lead managers for the Bharat Highways InvIT IPO, while Kfin Technologies will serve as the registrar for the issue. The listing of units is expected to occur on Wednesday, March 6, on both the BSE and NSE.
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