What you must know about Bharat Highways InvIT IPO?

Bharat Highways Infrastructure Investment Trust INVIT – About the company

As the name suggests, Bharat Highways Infrastructure Investment Trust INVIT is an infrastructure investment trust (INVIT), which normally manages a portfolio of infrastructure assets and acts as a pass-through vehicle to pass on the benefits to investors. Bharat Highways Infrastructure Investment Trust INVIT was established to acquire, manage, and invest in a portfolio of infrastructure assets in India. It is a SEBI recognized INVIT.

The portfolio of Bharat Highways Infrastructure Investment Trust INVIT comprises of 7 roads, all of which are operated on a HAM (hybrid annuity model) basis in Punjab, Gujarat, Andhra Pradesh, Maharashtra, and Uttar Pradesh. These roads are operated and maintained based on concession rights granted by the NHAI and are owned and operated by the Project SPVs, which are currently wholly owned by GRIL. Bharat Highways Infrastructure Investment Trust INVIT has been assigned a provisional rating of CRISIL AAA/Stable (Reaffirmed) from Crisil Ratings Ltd. It also has similar ratings from CARE and India Ratings and Research.

The fresh funds will be used to provide loans for Project SPVs for repayment and pre-payment of their outstanding loans, including accrued interest. Part of the fund will also be used for general corporate purposes. The IPO will be lead managed by ICICI Securities Ltd, Axis Bank Ltd, HDFC Bank Ltd and IIFL Securities Ltd; while KFIN Technologies Ltd will be the registrar to the IPO.

Highlights of the Bharat Highways InvIT IPO Issue

Here are some of the key highlights to the public issue of Bharat Highways InvIT IPO

• Bharat Highways InvIT IPO will be open from February 28th, 2024 to March 01st, 2024; both days inclusive. The IPO of Bharat Highways Infrastructure Investment Trust INVIT has a price band for the book building IPO has been in the range of ₹98 to ₹100 per share.
• Bharat Highways InvIT IPO will be entirely a fresh issue of shares and no offer for sale (OFS) component in the IPO. As you would be aware, a fresh issue tends to bring in fresh funds into the company, but is also EPS and equity dilutive. On the other hand, OFS is just a transfer of ownership.
• The fresh issue portion of the Bharat Highways InvIT IPO comprises the issue of 25,00,00,000 shares (2,500 lakh shares approximately), which at the upper price band of ₹100 per share will translate into a fresh issue size of ₹2,500 crore.
• Thus, overall Bharat Highways InvIT IPO will comprise of the issue of 25,00,00,000 shares (2,500 lakh shares approximately) which at the upper end of the price band of ₹100 per share aggregates to total issue size of ₹2,500 crore.

Promoter holdings and investor quota allocation quota

As per the terms of the offer, not more than 75% of the net offer is reserved for the qualified institutional buyers (QIBs), while not less than 25% of the net offer size is reserved for the HNI / NII investors. The table below captures the gist of the allocation to various categories.

It may be noted here that the Net Offer above refers to the quantity net of employee and promoter holding company quota, if applicable

Lot sizes for investing in the Bharat Highways InvIT IPO

Lot size is the minimum number of shares that the investor has to put in as part of the IPO application. The lot size only applies for the IPO and once it is listed then it can be even traded in multiples of 1 shares since it is a mainboard issue. Investors in the IPO can only invest in minimum lot size and in multiples thereof. In the case of Bharat Highways Infrastructure Investment Trust INVIT, the minimum lot size is 150 shares with upper band indicative value of ₹15,000. The table below captures the minimum and maximum lots sizes applicable for different categories of investors in the IPO of Bharat Highways Infrastructure Investment Trust INVIT.

It may be noted here that for the B-HNI category and for the QIB (qualified institutional buyer) category, there are no upper limits applicable.

Key dates for Bharat Highways InvIT IPO and how to apply?

The issue opens for subscription on 28th February 2024 and closes for subscription on 01st Marcy 2024 (both days inclusive). The basis of allotment will be finalized on 04th March 2024 and the refunds will be initiated on 05th March 2024. In addition, the demat credits are expected to also happen on 05th March 2024 and the stock will list on 06th March 2024 on the NSE and the BSE. Bharat Highways Infrastructure Investment Trust INVIT will test the appetite for such industrial support stocks in India. The credits to the demat account to the extent of shares allotted will happen by the close of 05th March 2024 under ISIN (INE0NHL23019). Let us now turn to the practical issue of how to apply for the IPO of Bharat Highways Infrastructure Investment Trust INVIT.

Investors can apply either through their existing trading account or the ASBA application can be directly logged through the internet banking account. This can only be done through the authorized list of self-certified syndicate banks (SCSB). In an ASBA application, the requisite amount is only blocked at the time of application and the necessary amount is debited only on allotment.

Investment View on Bharat Highways InvIT IPO

Here are some reasons why the investment in the INVIT may be a good idea for conservative long term investors.

There are several qualitative factors that form the basis for computing the Issue Price and justifying the investment price for the INVIT. These include as under

• Sizeable portfolio of stable revenue generating assets with no construction risk and long-term predictable cash flows
   
• Geographically diversified road asset portfolio and revenue base. This automatically reduces the concentration risk.
   
• Consistent track record in operating and maintaining projects in the roads sector in India. This is a key factor in any INVIT investment.
   
• This is an attractive industry sector with strong underlying fundamentals and favourable government policies to boot.
   
• Growth opportunities and rights to expand portfolio of assets are a major inherent advantage in this asset class.
   
• Skilled  and  experienced  management  team  with  industry  experience  with  a  focus  on  corporate governance for lower management level risk.Conservative investors with a longer term perspective can take a long serious look at this INVIT for long term conservative payouts