The first four infrastructure investment trusts (InvITs), which are likely to hit the primary markets this financial year, can reduce the overall debt of the sponsor groups by close to Rs 13,000 crores, says a report.
Stating that InvIT fund listing can provide cash-flow relief to the cash-starved sector, India Rating in a report, said that the companies that are likely to deleverage, by using the InvIT route this year, are Sterlite Power Grid Ventures, Rinfra and IL&FS Transportation Networks. IRB Infra has already closed an IPO of over Rs 5,000 crores.
“These four companies, through the public floats of their InvITs, can deleverage their balance sheets and refinance the remaining debt to the tune of Rs 3,600 crores, out of their total debt of Rs 13,000 crores, at lower costs,” India Rating said in a note. Deleveraging will provide a fillip to the coverage metrics of SPVs housed under the InvIT structures and refinancing and will further improve the credit profile of InvITs, the report added.
The agency expects IRB to deleverage up to 77.5 per cent of its Rs 3,513 crore debt (as of December 2016) on its operational toll road projects post-IPO, resulting in robust coverage metrics and favourable gearing. India Grid Trust (IndiGrid) is planning to hive off Sterlite Grid1 under its InvIT trust. SGL1 holds two operating transmission assets – Bhopal-Dhule Transmission Company and Jabalpur Transmission Company – which are the IPO assets. Post-IPO which is opening soon, it is likely to hold 15-25 per cent of IndiGrid.