Tata Realty plans ~3,000-cr infra investment fund

Tata Realty & Infrastructure, a unit of Tata Sons, is planning to float an infrastructure investment trust (InvIT) for its road projects this year and could raise ~3,000 crore through it.

“We are working on it and are in talks with investors,” said Sanjay Ubale, managing director and chief executive at Tata Realty & Infrastructure.

Tata Realty & Infra has a portfolio of 2,200 km of road projects and plans to increase this to 5,000 km by 2018-19. The company bought the 18.4-km Durg bypass toll road project for ~800 crore earlier this year. It operates the 110-km Pune-Solapur express highway.

TRIL Roads, a subsidiary, has won bids for development and operation of the 93.5-km Chittorgarh-Udaipur stretch of NH-76 in Rajasthan and the Hosapete-Chitradurga stretch of NH-13 in Karnataka.

Consultants said companies such as Tata Realty & Infrastructure were considering InvITs because of their quicker fundraising abilities. “In InvITs, the sponsors can explain projects to investors faster and raise money quickly,” said Neeraj Sharma, director at Grant Thornton Advisory. Sharma added the performance of listed InvITs would play on the minds of investors. “When you are in the market to raise money, potential investors will tend to benchmark the performance of listed peers,” he said. Road operator IRB’s InvIT Fund trades at ~94.15 on the NSE against its offer price of ~102 per share and Sterlite Power’s India Grid Trust is trading at ~91.50, against an issue price of ~100 per share. According to a recent

Bloomberg report, Infrastructure Leasing & Financial Services (IL&FS) is planning to raise $400 million (~2,500 crore) through private sale of units in an InvIT this month.

“We can float a REIT once we have a stabilised rental portfolio of 12 million sq ft. We have a portfolio of 8 million sq ft and have a potential portfolio of 18 million sq ft,” Ubale said.

He said Tata Realty & Infrastructure earned annual rent of ~350 crore. “Once we reach ~650 crore, we can float a REIT. We expect that to happen by 2020,” he added.

Tata Realty & Infrastructure is considering developing office properties in Hyderabad, Pune and Noida.

Recently, the Tata Realty & Infrastructure-Standard Chartered Private Equity joint venture acquired 47.5 acres on the Thane-Belapur road from Maharashtra Industrial Development Corporation for ~325 crore and 25 acres from property developer M3M for ~250 crore.

We can float a REIT once we have a stabilised rental portfolio of 12 million sq ft. We have a portfolio of 8 million sq ft and have a potential portfolio of 18 million sq ft SANJAY UBALE, managing director and chief executive at Tata Realty & Infrastructure