IRB sweetens way for Indian infrastructure trusts

Secondary market buffer priced in to make sure the new asset class is a success.

IRB Infrastructure Developers has launched the country's first investment trust (InvIT) on a more attractive valuation than market participants had been expecting in an attempt to ensure the new asset class gets off to a strong start

InvITs are spin-offs by developers of completed infrastructure projects, intended to free up much-needed capital to boost the country's infrastructure drive

IRB's Rs46 5 billion ($724 million) deal is being pitched on a narrow price range of Rs100 to Rs102 per unit, which translates to a 2018 yield of 12% and lifetime yield of 12 4% (both on a post-withholding-tax basis)

The upfront yield represents an extremely attractive 540bp pick up to benchmark 10-year Indian government securities, which...

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