Bharat Highways Infrastructure Investment Trust InvIT

Bharat Highways Infrastructure Investment Trust InvIT –IPO DETAILS 

Company Overview 

As of January 31, 2024, the Special Purpose Vehicles (SPVs) collectively possess a portfolio of infrastructure projects, specifically consisting of approximately 497.3 kilometers of constructed roads distributed across five different states within India. These projects were procured through the National Highways Authority of India (NHAI) under the Hybrid Annuity Model (HAM). The Hybrid Annuity Model, a government initiative, serves as a mechanism to involve private infrastructure developers in the process of constructing roads and highways. Under this model, the government shares a portion of the construction costs, mitigating the financial burden on developers. Typically, the government compensates for a part of the project cost, and the remaining expenses are undertaken by the developer.  

In return for their investment and involvement in the construction process, developers are entitled to receive annuity payments from the government. These payments are adjusted for inflation and are disbursed over a specified concession period. For the projects held by the SPVs, this concession period extends from the years 2035 to 2037. 

Objective of the IPO 

Here are a few quick reasons why company is going public:  

1. The proceeds from the issuance will be utilized to extend loans to the Project SPVs, facilitating the repayment or settlement of their existing loan balances and accrued interest. 

2. Allocation of funds for general corporate purposes.   

Company Financials 

Pros 

1. The company boasts a portfolio comprising 7 highway assets totaling 497 km in length. Each Special Purpose Vehicle (SPV) has established long-term concession agreements with NHAI, spanning residual operation periods ranging from 11.07 to 13.51 years. 

2. The InvIT encompasses operational HAM assets strategically distributed across five states within India. This diversification is poised to stabilize revenue streams, offering resilience against economic, political, or social unrest in any specific state. 

3. GR Infrastructure Ltd, in its endeavor to contribute assets to the InvIT, has also extended a Right of First Offer agreement pertaining to all additional road assets it develops. Currently, the company owns 23 such additional assets. 

4. NHAI is committed to disbursing annuities alongside an interest rate calculated based on the reduced balance of the completion cost. The interest rate, set at 3% above the RBI bank rate, ensures an inflation-adjusted return. 

Cons 

1. Given the government ownership of the infrastructure assets, the investment trust will be subject to rigorous regulatory and compliance requirements, particularly concerning ownership due to national security considerations. 

2. The SPV's assets have an average age of 11-13 years, during which they will receive cash flow from NHAI. Failure to acquire new assets within this timeframe may impede the trust's ability to generate fresh cash flows. 

3. HAI has established operational and maintenance standards within its concession agreement. Non-compliance with these standards may lead to premature termination, resulting in NHAI only paying a termination payment lower than the anticipated amount. 

How to Apply for this IPO 

1. Go to https://ipo.adityatrading.in/ 

2. Enter your Client ID 

3. Enter the OTP received in your registered mobile number. 

4. Choose the IPO and click on apply button. 

5. Enter the UPI ID, Quantity, and Cut off the price. 

6. Click on submit button 

7. Confirm the mandate request received on your phone by entering the UPI Pin. 

You can also watch our youtube video on “How to Apply on IPO” by clicking on the link “https://www.youtube.com/watch?v=1qOI8dCpl1I&ab_channel=ATS”