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Bittersweet After Taste

Hyped up InvITs have not performed as expected leaving investors with mixed feelings

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Two much-awaited Infrastructure Investment Trust Funds (InvITs) — IRB and IndiGrid — listed with huge fanfare in May and June of 2017. They were tipped to herald a new way for infra companies to monetise their assets and de-leverage their books. 

At the same time, they were also seen as a good investment opportunity for HNIs and institutional investors. However, a year after the launch, the enthusiasm around InvITs has thinned. The shares of IRB InvIT and IndiGrid InvIT have underperformed the Sensex since listing. In the last week of August, IRB InvIT Fund was trading 26% below its issue price of Rs.102 and IndiGrid was 8% below its issue price of Rs.100 (See: Muted performance). 

During the launch, investors had lined up for their share of InvITs and the issues were oversubscribed. But waning investor interest fuelled by deteriorating assets has left investors complaining about their investment. In hindsight, it seems a classic case of investor greed embracing mis-selling with open arms. As the fund was listed as equity and benchmarked to equity indices, investors expected higher return and ended up being disappointed, according to Deepak Jasani, head — retail research, HDFC Securities. Some analysts, though, feel their final return should be judged in the form of dividends, interest and buybacks rather than just on current price. “Although InvITs trade on the stock exchange, their return should not be compared with equity instruments. Extensive investor education is important so that they attract the right investors,” says Amishi Kapadia, senior president and global head of merchant banking, Yes Securities. 

Amishi Kapadia Senior president, YES SecuritiesFirst to market

India’s first InvIT launched la

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