Shrem InvIT scraps plans for NCDs; opts for loan to acquire 10 road SPVs

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Shrem InvIT has abandoned its plan to raise Rs 1,000 crore via debentures to complete the acquisition of 10 special purpose vehicles (SPVs) associated with roads belonging to Dilip Buildcon Ltd. The Infrastructure Investment Trust (InvIT) will instead raise Rs 860 crore through term loans, citing this approach as financially more efficient for completing transactions.


Existing term loan lenders have sanctioned credit to be used for the acquisition of the promoter’s stake, repayment of unsecured loans, and settling debts with senior creditors of identified SPVs. These SPVs are part of the 10 new SPVs involved in the deal. State Bank of India and Union Bank are significant lenders to Shrem InvIT, with an exposure in the region of Rs 5,500 crore. The term loan earmarked for funding the acquisition of road projects carries a “AAA” rating from Indian Ratings.


Nikhil Pareek, Executive Director of Shrem InvIT, stated that the trust is concentrating on operating annuity projects, which offer the advantage of being completed and thus free of execution risks.


To date, Shrem InvIT has exclusively acquired projects from Dilip Buildcon but is open to considering operating road projects from other entities. The trust is evaluating an additional 10 projects and plans to expand its capital base by Rs 330 crore, according to Pareek.


By the end of the fourth quarter of financial year 24 (4QFY24), Shrem InvIT aims to acquire 10 new SPVs from Dilip Buildcon. Provisional completion dates for all 10 projects have been achieved, and annuities for eight of these projects are due and have been received, as per India Ratings.


Following the acquisition, Shrem InvIT will boast a diversified portfolio comprising 34 projects. These will include 15 projects from the National Highway Authority of India (NHAI) and one Hybrid Annuity Model (HAM) project, 10 state annuity plus toll projects, six state annuity projects, and two toll projects, one of which is awarded by NHAI.


India Ratings stated that it continues to consolidate the cash flows of all 34 SPVs—both initial portfolio SPVs and the new ones—under Shrem InvIT. The entity has a consolidated debt of Rs 7,735.1 crore, which includes sanctioned term loans to be availed for funding the additional 10 SPVs under the InvIT structure.