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Oriental Structural Engineers's InvIT plan remains on track

InvITs are trusts designed to manage income generating infrastructure assets, by offering investors regular yield and a liquid method of investing in road and power assets

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At a time when other infrastructures and power companies have shelved their plans to come with an Infrastructure Investment Trust (InvIT), New Delhi based Oriental Structural Engineers continues with its plan to raise around Rs 2,500 crore by privately placing the trust.

Three people aware of the development said to DNA Money that the infrastructure company has not shelved its plans. "The company continues to explore options and have been reaching out to investors. Though it has been over a year still they haven't kept the plans in abeyance," said one of the three people.

InvITs are trusts designed to manage income generating infrastructure assets, by offering investors regular yield and a liquid method of investing in road and power assets.

In the last two years, to name a few, GMR Infrastructure, GVK Power Infrastructure Limited, Reliance Infrastructure, MEP Infrastructure Developers, IL&FS Transportation Network had plans to come up with an InvIT. But none of them was unable to pull it off and thereafter the market conditions or liquidity crunch only forced the companies to shelve the plans.

Another source said that a total of seven revenue generating road assets would be transferred to the trust by New Delhi based company.

At the moment, there are three InvITs – two of them listed IRB InvIT Fund (by IRB Infrastructure Developers), IndiGrid InvIT Fund (of Sterlite Power Grid Ventures Limited) and one privately placed – IndInfravit sponsored by L&T Infrastructure Development Projects Limited.

Like IndInfravit, even Oriental Structural Engineers is working towards to place the Trust privately. However, the yield out of the road assets is unlike to be as high as IRB InvIT Fund at 12%. "They went for a very high yield. Given the existing market conditions, such a high yield will not be possible," added a source.

"In the given market conditions where there is liquidity crunch, it is a challenge to either raise funds through an initial public offering (IPO) or an InvIT. Despite the challenges, their plans haven't got derailed, but it is slightly delayed," said one of the three sources cited above.

Oriental Structural Engineers has a significant portfolio of operational Build-Own-Transfer (BOT) projects. By monetizing the road assets they will deleverage the company apart from financing ongoing and upcoming road projects. It is not known if InvIT is launched during this fiscal or next.

DNA Money contacted Vivek Rastogi, chief executive officer of Oriental Structural Engineers, who neither confirmed nor denied the plans to raise about Rs 2,500 crore through the InvIT.

EXPLORING OPTIONS

  • Rs 2,500 cr – the New Delhi-based company planning to raise funds
     
  • 12% – yield of road assets at IRB InvIT Fund
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