DEAL: India’s first infrastructure trust IPO

Author: Brian Yap | Published: 18 May 2017

IRB Infrastructure Developers has set a national precedent by executing the country’s first listing of a national infrastructure investment trust (InvIT) fund. But issues over the classification of such a trust as debt or equity have complicated the deal.

After more than two years of preparation, IRB's InvIT Fund successfully raised $782 million though its initial public offering (IPO), which was 8.75 times oversubscribed. This closed on May 5. Another InvIT IPO, that of India Grid, kicked off on May 17.

But counsel involved in the IRB deal point to inconsistency among relevant regulators in their respective definition of a trust. While the Securities and Exchange Board of India (Sebi) said it should be treated as equity, other regulators controlling individual entities, corporates, insurance companies and pension funds could argue otherwise.

"They had to come to a consensus because the classification categorises the exposure these companies can take...