IRB InvIT Fund has muted listing

There is a new kid who got added on the block today. IRB InvIT Fund, got listed on the BSE – the first infra fund to get listed.

It had made an IPO at an issue price of Rs.102 and it got listed on the BSE at Rs.103.25. Since then, it has come down below the IPO price and is now quoted at Rs.100 levels.

This is a very subdued listing for the stock, whose IPO had got subscribed 8.57 times. It was institutional investors who led the subscription – their portion was oversubscribed 10.81 times  with the QIP and retail investors together at 5.89 times.

This is neither a debt nor pure play equity, since it lacks a fixed rate of interest and assurance of principal repayment like debt, while risk borne is higher (inflation, toll collection, interest rate etc.) similar to equity. Thus, it is quasi-debt mixed with some equity risk. Based on holding period for computing capital gains, it tilts more towards debt, since, to qualify as a long term asset, holding period is a minimum of 3 years, unlike listed equity shares, enjoying a shorter 1 year holding window, despite both being subject to securities transaction tax (STT).

Our IPO Analysis verdict has been, “Given the ongoing bull run in Indian equities, IRB InvIT is suited only as a diversification option for ultra HNIs, with liquidity needs, after understanding the novel financial instrument well. Since it is quasi debt, mixed with some equity risk, it scores over pure debt instruments, while obviously trailing equity.”