Icra says inflows will occur in next 18 months, crucial for the sector that needs $30 bn capital
The recently-introduced Infrastructure Investment Trusts (InvITs) will provide the much-needed fillip to the infrastructure sector.
According to rating agency Icra, the sector would raise equity capital to the tune of Rs 20,000 crore via InvITs, of which Rs 8,500 crore would be in the next few months.
Several companies have come forward to raise capital through InvITs for road, renewable energy and transmission sectors. This Rs 20,000 crore will be raised in the next 12 to 18 months to unlock capital (both equity and debt) in the operational infrastructure assets.
"We expect the first InvIT issuance to take place in next 3 to 6 months, once the concept finds acceptance from the market, inducing both developer and investor confidence in InvITs. These structures have started to attract increased interest after a series of regulatory amendments made them more palatable, and could be crucial for the estimated $30 billion capital that the infrastructure projects need," said Rohit Inamdar, senior vice president, Icra.
As of now, three InvITs, namely, IRB InvIT Fund, GMR Infrastructure Investment Trust and MEP Infrastructure Investment Trust have registered with regulator Securities and Exchange Board of India. Together, these three companies would be raising raise Rs 8,500 crore.
The other infrastructure companies have either applied or are evaluating this route for fund-raising. These firms are ITNL, Sterlite Power Grind Ventures, IL&FS Energy Development, Mytrah Energy, Reliance Infra and Adani Group.
"InvIT will be a sound alternate option for developers to release capital from their completed projects. Currently, majority of credit to infrastructure sector is from banks and infrastructure finance companies with an estimated credit of Rs 16 lakh crore. Apart from this, equity capital in infrastructure projects is estimated to be in the range of Rs 6-8 lakh crore. A large part of this capital would be in completed projects and InvITs can help unlock some of this capital which can be deployed in newer projects," Inamdar said.
Banks alone have exposure of Rs 9 lakh crore, whereas infrastructure finance companies have second largest exposure of around Rs 7 lakh crore. Other than this, infrastructure projects are also financed via funding from insurance companies, pension funds, infrastructure debt funds, corporate debt, etc.
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