IL&FS takes InvIT route to sell nine road projects.

IL&FS Transportation Networks, the largest company in the IL&FS group, has taken steps to set up an infrastructure investment trust (InvIT) in a bid to offload the company’s road assets that are not seeing much demand.

An InvIT is like a mutual fund that allows a project’s promoter to monetise revenue-generating infrastructure assets by enabling investors or unit holders to invest in them without having to own them.

Recently, IL&FS Transportation Network informed the stock exchange that the board approved the incorporation of a new subsidiary of the company that will act as the sponsor of a proposed Sebi-regulated InvIt. The board had granted an in-principle approval to transfer the company’s shareholding in nine SPVs to the trust. Last month, while giving an update of the progress in resolving IL&FS group debt, Uday Kotak — the government-appointed chairman of the company — said that demand for the road assets was weak and some projects had not received any bids.

Kotak had said that the board had decided to explore the option of creating an InvIT to which the combined debt of Rs. 10,830 crore of nine road projects can be transferred. IL&FS had received bids for only 10 of its 14 operating road assets. Of the 10 bids, the board had sent binding bids for five assets to the committee of creditors for approval. These bids were against a debt of Rs. 9,500 crore for the five road projects.

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