How Will GIC's Investment of INR 1500K Crore in IRB InvIT to Finance The Hyderabad Ring Road Impact The Hyderabad Real Estate Market?

Image Source: Times of India

As per news sources, Singapore's sovereign wealth fund GIC is evaluating a 1.5 trillion rupee (INR) investment in IRB Infrastructure Trust, an infrastructure investment trust (InvIT) sponsored by the construction company IRB Infrastructure Developers.

GIC is a current investor in IRB Infrastructure Trust.

The proposed investment will be used to finance the acquisition of the Hyderabad Outer Ring Road Hyderabad Outer Ring Road toll-operate-transfer (TOT) monetisation plan for INR 7,380 crores for a concession period of 30 kilometres beginning in April 2023. This is the second largest TOT asset acquired by IRB, following the February 2020 acquisition of the Mumbai-Pune Motorway project for INR 8,262 crores. IRB's primary company and two InvITs have a combined asset base of over INR 70,000 crore.

This is the second major TOT asset acquired by IRB, following the Mumbai-Pune Expressway

GIC is currently evaluating the ORR project that IRB obtained through the TOT procurement procedure. If GIC decides to join IRB in acquiring the road project, the project will be acquired through the InvIT, in which GIC controls a 49 percent stake. "Discussions are ongoing between the two parties as per sources.

The Hyderabad ORR is a 158 km, eight-lane ring road motorway that encircles Telangana's capital city, Hyderabad. A significant portion of the approximately 124 km of ORR, which was inaugurated in December 2012, passes through urban nodes such as Hi-Tech City, Nanakramguda Financial District, International Airport, IKP Knowledge Park, Hardware Park, Telangana State Police Academy, Singapore Financial District, and Game Village.

The purchase of the ORR project for INR 7,380 billion includes an equity value of INR 3,000 billion, which, if done through the InvIT, would result in GIC and IRB investing approximately INR 1,500 billion each into the InvIT, according to a second source.