GIC and IRB are likely to close the Rs 4,400 crore deal in the next two months.
Mumbai: GIC has given a Rs 700 crore interim loan to IRB Infrastructure, after the Singapore sovereign wealth fund a few months ago made an investment commitment of Rs 4,400 crore in an investment trust (InVT) introduced by the road contractor, three people with direct knowledge of the matter said.
As much as 90% of IRB’s lenders, including Andhra Bank, Canara Bank, State Bank of India, Bank of Baroda, Aditya Birla Finance and ICICI-backed Infra Debt Fund have given ‘No Objection Certificates’ to transfer some of IRB’s assets to the private IRB Infrastructure Trust, said one of the people. Banks could not be contacted immediately for comment.
GIC and IRB are likely to close the Rs 4,400 crore deal in the next two months. The interim loan is to meet the immediate business needs of the projects that would become part of the trust as it takes time to close any InVT structure, said another person.
GIC did not reply until press time Tuesday to ET’s email seeking comment.
“This is an interim funding arrangement, which will be adjusted as and when the GIC money gets credited post closure of the private InVT deal,” said an IRB spokesperson.
IRB has issued debentures against the interim loan, with yields in the range of 11-11.80% and a two-year maturity, the people ET spoke to said. IRB could redeem these papers before the maturity date.
GIC’s move to fund the interim needs of the investment trust until its investment is materialised will likely give more confidence to other investors in the infrastructure sector, said industry insiders. “This demonstrates that GIC bestowed confidence in its relationship with IRB, which in turn, could fetch more foreign capital into local InVTs,” said a senior executive involved in the deal.
IRB had announced the Rs 4,400 crore GIC investment in August. While Bajaj Consultant was the financial adviser to that proposed investment, Mumbai-based SNG & Partners was the legal adviser.
IRB’s latest InVT will own nine road assets of which six are under construction. Those are all supposed to be BOT (Build Operate transfer) projects, including in Haryana, Uttar Pradesh, Rajasthan, Gujarat, Maharashtra, and Karnataka. IRB may later bring in new projects into the trustee.
The Securities Exchange Board of India is said to have registered the private InVT last month.
IRB had launched its maiden InVT in 2017, but through a public issuance.