Bharat Highways InvIT Rockets Towards IPO, Aims to Fuel ₹2,500 Crore Investment Engine

Bharat Highways InvIT, poised to become India’s first road-focused infrastructure investment trust (InvIT), announced its maiden public offering (IPO) today. The ₹2,500 crore issue, launching on February 28th and concluding on March 1st, seeks to unlock value from operational road assets and attract investor interest in the burgeoning InvIT space.

The offering, priced at ₹98-100 per unit, will see proceeds channelled towards repaying outstanding loans of project SPVs (special purpose vehicles). This strategic move aims to streamline finances and pave the way for future growth.

The issue is being made through the book-building process, wherein not more than 75% of the IPO will be set aside for institutional investors, and the remaining 25% will be reserved for non-institutional investors.

Established to acquire, manage, and invest in Indian infrastructure assets, Bharat Highways InvIT boasts an initial portfolio of seven operational HAM (hybrid annuity model) roads spanning five states. These roads collectively cover an impressive 497.292 km, showcasing the InvIT’s commitment to providing reliable connectivity across diverse regions.

Furthermore, the InvIT has secured a right of first offer from G R Infraprojects (GRIL) to acquire specific road assets in the future, offering promising expansion opportunities.

Recognizing the crucial role of institutional investors, the issue allocates 75% of its size to qualified institutional bidders (QIBs), while the remaining 25% caters to non-institutional investors (NIIs). Investors can participate with a minimum bid of 150 units, offering an accessible entry point into this high-potential sector.

For the period ended on September, 2023, the InvIT posted a profit after tax of ₹101.35 crore and a revenue of ₹388.54 crore. The company’s bottomline stood at ₹527.05 crore with a revenue of ₹1,537.47 crore for the financial year ended on March 31, 2023.

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ICICI Securities, Axis Capital, HDFC Bank, and IIFL Securities, renowned investment firms, serve as the book-running lead managers for the IPO, ensuring a smooth and efficient offering process.

The proposed listing on both BSE and NSE reflects the InvIT’s ambition to achieve wider market reach and liquidity, attracting a diverse pool of investors.

With its robust portfolio, strategic partnerships, and experienced management team, Bharat Highways InvIT is poised to capitalize on India’s growing infrastructure needs and offer investors a compelling opportunity to participate in this dynamic sector’s future.

Bharat Highways InvITcompany details:

Here’s a simpler explanation of Bharat Highways InvIT:

Imagine a company that collects money from investors and uses it to buy and manage toll roads, highways, and other infrastructure projects in India. That’s essentially what Bharat Highways InvIT does.

Here’s a breakdown:

• They raise money: By selling “units” to investors, similar to buying shares in a company.
• They invest in infrastructure: They use the money to buy toll roads, highways, etc., built by other companies.
• They manage the assets: They collect tolls, maintain the roads, and ensure they operate smoothly.
• They share profits: They distribute a portion of the profits earned from the tolls to the investors who bought units.

Think of it like this: You invest in Bharat Highways InvIT, they use your money to buy a toll road, and you get a share of the money collected from the tolls as a reward.

This is a simplified explanation, and there are more details involved, but hopefully, it gives you a clearer understanding of what Bharat Highways InvIT does!

Risk Assessment:

1. Reliance on NHAI Annuity Income: The InvIT’s revenue heavily depends on consistent annuity income from NHAI for its infrastructure assets. Any reduction or non-receipt of this income could negatively impact distributions to unitholders.
2. Asset Acquisition and Revenue Generation: Failure to identify and acquire new infrastructure assets that generate comparable revenue may hinder the InvIT’s business, financial health, and ability to distribute profits.
3. Financial Covenants and Default Risks: The presence of restrictive covenants in financing agreements with banks and financial institutions could limit flexibility in managing the business or utilizing cash/assets. Defaults under these agreements may impede the InvIT’s ability to make distributions.
4. Distribution Vulnerability to Project SPVs Performance: The InvIT’s capacity to sustain consistent distributions relies on the financial performance and profitability of its Project SPVs. Insufficient operating profit from these assets could hamper distributions.
5. Dependency on Third Parties: Relying on third parties for operating and maintaining InvIT assets poses risks of delays, defaults, or subpar performance, which could affect overall operations.
6. Concession Agreement Termination: The premature termination of concession agreements for InvIT assets could result in non-receipt of due payments, significantly adversely impacting financial stability.
7. Regulatory Compliance and Permit Risks: Challenges in renewing or maintaining statutory and regulatory permits and approvals necessary for operating InvIT assets could disrupt business operations and financial conditions.
8. Limited Operating History: The InvIT lacks an established operating history, making it difficult for investors to predict future growth prospects and performance accurately.

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Here’s how to apply for the Bharat Highways InvIT IPO:

Dates to Remember:

• IPO Open: February 28th, 2024
• IPO Close: March 1st, 2024

Eligibility:

• Resident and non-resident Indians can participate.

Minimum Investment:

• ₹14,700 at the lower price band (150 units @ ₹98)

Application Methods:

1. UPI App:

• The quickest and most convenient option.
• Supported by popular apps like Kite, Google Pay, PhonePe etc.
• Simply enter your bid, accept the UPI mandate, and the funds will be blocked in your account.

2. ASBA (Application Supported by Blocked Amount):

• Available through your bank’s netbanking platform.
• Funds are only debited if your bid is allotted.
• Check with your bank for specific instructions.

3. Offline Form:

• Download the form from the NSE or BSE website.
• Fill it out and submit it to your broker or bank along with the application fee.

Important Note:

• Read the IPO prospectus carefully before investing.
• Understand the risks involved in infrastructure investments.
• Consult a financial advisor if needed.

Checking the Allotment Status of the Bharat Highways InvIT IPO::

• The allotment status will be announced on March 4th, 2024.
• You can check it on the Registrar and Transfer Agent’s website or the NSE website.