Capital Infra Trust IPO to open on January 7; Check Details
Capital Infra Trust IPO
Capital Infra Trust IPO to Open on January 7, 2025: Key Details, Price Band, and More
Capital Infra Trust, formerly known as National Infrastructure Trust, is set to launch its Initial Public Offering (IPO) on January 7, 2025.
This will mark the first infrastructure investment trust (InvIT) IPO of the new year, offering investors a unique opportunity to participate in a portfolio of operational, revenue-generating infrastructure assets across India.
The IPO will open for bidding to both institutional and non-institutional investors and is scheduled to close on January 9, 2025.
With the growing interest in infrastructure investment trusts (InvITs), the Capital Infra Trust IPO is expected to attract considerable attention from investors seeking exposure to India’s infrastructure sector, which has long been a key driver of economic growth.
Below, we break down the key details of this upcoming offering, including its price band, lot size, allocation structure, use of proceeds, and more.
IPO Price Band and Lot Size
Capital Infra Trust has set the price band for its IPO at ₹99 to ₹100 per unit. This price range makes the offering accessible to a broad base of investors, including both retail and institutional participants.
Retail investors are required to apply for a minimum lot size of 150 units, which means the smallest investment retail investors can make in the IPO is ₹15,000.
This structure is designed to enable widespread participation, particularly from retail investors looking for exposure to infrastructure assets in India.
Offer Details
The total issue size of the Capital Infra Trust IPO is divided into two key components:
- Fresh Issuance of Units: The Trust will issue 10.77 crore units worth approximately ₹1,077 crore. The fresh issuance is intended to raise capital that will primarily be used for funding the repayment of loans and other strategic purposes (explained below).
- Offer for Sale (OFS): An additional 5.01 crore units, amounting to ₹501 crore, will be sold by existing shareholders through the offer for sale route. These units are being sold by current investors, allowing them to partially exit their investments in the Trust.
Thus, the combined offering amounts to ₹1,578 crore, providing a significant opportunity for investors to buy into one of India’s leading infrastructure investment vehicles.
Allocation and Book Building Process
The Capital Infra Trust IPO will be conducted through the Book Building Process, a common method for offering shares to the public.
This process allows the market to determine the final price within the specified price band, based on the demand from investors.
The allocation structure for the IPO is as follows:
- 75% of the total offer will be allocated to Institutional Investors (Qualified Institutional Buyers, or QIBs). This category includes large institutional investors like mutual funds, insurance companies, pension funds, and foreign institutional investors (FIIs). These investors will receive their allotment on a proportionate basis, based on the demand within this category.
- 25% of the offer will be allocated to Non-Institutional Investors (including High Net-Worth Individuals, or HNIs). These investors are typically individual investors with higher levels of investable assets. Like institutional investors, non-institutional investors will also be allotted units on a proportionate basis depending on their bids.
The issue is expected to generate considerable interest, as it offers institutional investors a chance to participate in a high-quality infrastructure trust, while also catering to retail investors through the minimum lot size of 150 units.
Use of Proceeds
The net proceeds from the IPO will primarily be utilized for two key purposes:
- Repayment of Loans to Project SPVs: A significant portion of the proceeds will be used to provide loans to the Project Special Purpose Vehicles (SPVs) in the Trust’s portfolio. These funds will be utilized to repay or prepay existing loans, including accrued interest and any prepayment penalties, effectively reducing the debt burden of these SPVs. This is part of Capital Infra Trust’s strategy to strengthen the financial position of its assets and improve their cash flow generation potential.
- Settling Unsecured Loans from the Sponsor: Additionally, the proceeds will be used to provide loans to the Project SPVs to settle any unsecured loans obtained from the Sponsor, Gawar Construction Limited. This will help streamline the financing structure of the Trust’s assets and enhance operational efficiency.
The careful management and use of IPO funds are critical to the Trust’s ability to maintain its operational stability and generate sustainable returns for its investors.
Key Partners in the IPO
Several important entities are involved in the Capital Infra Trust IPO, ensuring a smooth and transparent process:
- Lead Managers: The IPO is being managed by SBI Capital Markets Limited and HDFC Bank Limited. Both are well-established financial institutions with significant experience in managing large public offerings, providing strong credibility to the issue.
- Registrar to the Issue: KFin Technologies Limited will serve as the registrar for the issue, handling all investor-related activities, such as the allotment and refund process.
- Trustee: Axis Trustee Services Limited will act as the Trustee for the IPO, overseeing the overall governance and compliance aspects.
- Investment Manager: The Trust has appointed Gawar Investment Manager Private Limited as the Investment Manager, responsible for managing and overseeing the portfolio’s performance and strategy.
- Sponsor: Gawar Construction Limited, the parent company, is the sponsor of the Trust and plays a crucial role in its strategic direction and operations.
About Capital Infra Trust
Founded in September 2023 by Gawar Construction Limited, Capital Infra Trust functions as an Infrastructure Investment Trust (InvIT) with a focus on infrastructure assets in India.
The Trust’s primary objective is to acquire, manage, and invest in completed, revenue-generating infrastructure assets that are operated by project-specific Special Purpose Vehicles (SPVs).
As of September 2024, the Trust’s portfolio includes nine completed assets spread across approximately 682.43 kilometers in seven Indian states.
These assets are designed to provide long-term, stable cash flows to investors. The weighted average residual concession period of the assets is 11.7 years, which indicates the remaining duration of the agreements under which these assets are operated.
While the Trust’s operational assets have shown significant revenue generation, there has been a decline in performance over the past year.
The revenue for the fiscal year 2024 was ₹1,485 crore, a decrease from ₹2,033 crore in FY 2023. Similarly, profits dropped sharply to ₹125.8 crore, compared to ₹497.2 crore in FY 2023.
Despite these declines, the Trust continues to manage a robust portfolio, and the IPO proceeds will play a key role in addressing the financial challenges and strengthening the portfolio’s stability.
Final Remarks
Capital Infra Trust’s IPO offers a compelling opportunity for both institutional and retail investors to participate in the growing Indian infrastructure sector.
The Trust’s well-established portfolio of revenue-generating assets, coupled with its strategic use of the IPO proceeds to reduce debt and strengthen its operations, makes this a noteworthy investment opportunity.
With a clear focus on financial prudence, long-term growth, and stability, Capital Infra Trust’s IPO could be a significant event in India’s infrastructure investment space in 2025.
Investors interested in gaining exposure to high-quality infrastructure assets may find this offering an attractive option.
