Largest Transaction In Indian Highway Sector: Singapore’s Sovereign Wealth Fund GIC Invests ₹3,753 cr In IRB Infra’s InVIT


In the largest transaction in the roads and highways sector in India, leading road developer IRB Infrastructure Developers on Tuesday (Feb 25) announced that it has received the first tranche of investment of  ₹3,753 crore from Singapore’s GIC affiliates.

GIC,  a sovereign wealth fund  set up in 1981 by government of Singapore, manages over $100 billion in public and private investments across asset classes such as private equity, real estate and public equity. GIC had announced last year that it plans to deploy up to $1 billion in India through an investment platform to acquire operating roads in an ambitious effort to expand its presence in the country’s infrastructure sector

In a regulatory filing to SEBI, IRB Infrastructure Developers said  ₹3,753 crore from GIC affiliates has been received out of its commitment of ₹4,400 crores by IRB Infrastructure Trust.

The balance commitment will be invested on the progress of construction of the under-construction projects,” the filing added.

In August 2019, the company had announced signing of definitive agreements with GIC affiliates, for an investment up to  ₹4,400 crore — amounting to 49 per cent stake in a portfolio of nine of its assets through Private InvIT structure (IRB Infrastructure Trust), while IRB was to retain controlling stake of 51 per cent in the Trust.

IRB will transfer 9 of its build operate transfer (BoT) Road assets into a Private InvIT. The Portfolio spans across 5,900-km in Haryana, Uttar Pradesh, Rajasthan & Gujarat, Maharashtra and Karnataka.
All 9 assets are revenue generating assets and on completion will take the  enterprise value of the Private InvIT Rs 22,500 crore.
“All nine assets in the portfolio are revenue generating assets,” the filing said.

The net revenue of the portfolio in FY2019 was around  ₹630 crore. Upon completion of construction of the nine BOT (build-operate-transfer) assets, the enterprise value of the private InvIT will be about  ₹22,500 crore.

With this investment for the largest transaction in the roads and highways sector, a meaningful long-term relationship has been forged with GIC, one of the world’s leading sovereign wealth funds,” said Virendra Mhaiskar, Chairman and Managing Director, IRB.

The allotment of units to the investors will happen by February 27, 2020. Post the allotment of units, IRB will hold 51 per cent and GIC affiliates will hold 49 per cent stake in the Private InvIT.

“This platform will not only give us exposure to a large, well-positioned and diversified portfolio of toll roads in India, but also enable IRB to continue growing their business. India remains a key long-term market for GIC given its strong economic fundamentals and infrastructure development potential,” said Ang Eng Seng, Chief Investment Officer of Infrastructure at GIC.

The company’s share price gained 9 percent intraday on February 25 after the company trust received first tranche of investment from GIC affiliates.