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Infrastructure and engineering major Larsen & Toubro has gone ahead with its plans to establish an infrastructure investment trust (InvIT).
L&T Infrastructure Development Projects Ltd (L&T IDPL), the subsidiary company of L&T, has submitted the application for registration of as an infrastructure investment trust to the Securities and Exchange Board of India (SEBI) on September 1, 2017, the company has disclosed to the exchanges.
Analysts had earlier this year suggested L&T could raise around Rs 2,000 crore through InvIT route, however, the company has not yet identified the possible issue size.
In July this year, R Shankar Raman, Director and Chief Financial Officer of Larsen & Toubro, had noted that the group was exploring the option of going through the InvIT route, but no final decision was taken a that point of time.
Last month the first two InvITs in the Indian market that went public in May - IRB InvIT Fund, sponsored by IRB Infrastructure Developers, and IndiGrid Trust, an InvIT sponsored by Sterlite Power, - have announced their maiden dividend distribution for the first quarter which, according to analysts, was in line with promised yields.
Several more infrastructure developers, including Reliance Infrastructure, MEP Infrastructure Developers, IL&FS Financial Services and GRM Infrastructure, had announced plans for InvITs earlier this year.
Experts believe, however, that the sluggish performance of the first two InvITs might have forced other players to “wait and watch” the performance of this new instrument for at least one-two more quarters.
InvITs are trusts that manage income-generating infrastructure assets, offering investors regular yield. InvITs emerged as one of the tools for infrastructure developers to unlock capital, reduce debt and also get the additional source of funding.
According to India Ratings & Research, infrastructure players could raise around Rs 15,000 crore to Rs 20,000 crore through the InvIT route this year.
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