Here's how InvITs trade in secondary market

MUMBAI: Non-banking finance companies and some retail investors who could not buy in the initial public offer rushed in to buy in the secondary market pushing down the yield on the first infrastructure investment trust, IRB InvIT and buoying prices.

Driven by higher demand, the price rose as much as Rs 105 pulling the yield down by about 50 basis points at that price on Thursday, the first day of trading after IRB securities listed on the stock exchanges.

The infrastructure investment trust’s closed its initial public offering (IPO) earlier this month was oversubscribed 8.57 times. The issue was open to bidding between May 3 and May 5 and the offer had a price band of Rs 100-102.

Some short term investors including global funds have exited on day one booking profits, dealers said.

“The secondary market response has exceeded average expectation, considering this is a yield product,” said Rajkamal Bajaj, director at Bajaj Consultants that advised IRB InvIT. “Many HNIs and some companies, who could not invest in the primary issue, have been able to do so through the secondary market route.”

“Besides, some global hedge funds have exited investment booking profits after price rise,” Bajaj added.
Nomura Singapore Ltd and ECL Finance are two of the institutional participants that sold securities on Thursday, three market sources said. The two companies could not be contacted immediately for comments.

One renowned Mumbai-based surgeon is believed to have invested while a socialite engaged in public relations may have taken bet through the secondary route. Delhi-based PFIL Securities and Mumbai-based Subhkam Ventures have bought a few lakhs worth of papers.

“Market volumes and price should stabilise in coming days with more participation from high networth individuals and foreign and domestic Institutional demand,” said Bajaj.

On day one, trading volume was nearly Rs 1,000 crore more than the average market estimates.

On Friday India Grid InvITs, billionaire Anil Agarwal-owned power transmission company closed for subscriptions as it has successfully mopped up Rs 2,250 crore by selling hybrid instruments that bet on infrastructure projects assessing steady revenues and cash flows.

“The first dividend announcement will give more comfort and attract more interest from both FPIs and wealthy investors as the market matures,” said Mayur Patel, fund manager, DSP BlackRock Investment Managers. These are still early days and liquidity needs to be tested over the medium term. Once the model lives up to expectations for a reasonable period, higher foreign interest may improve liquidity.”
IRB InvITs on Friday closed at Rs 100.80 erasing initial gains amid a fall in trading volumes as traders said IndiGrid primary market too was attracting investors.

Anil Ambani-owned Reliance Infrastructure is also set to raise up to Rs 3,200 crore by selling InvIT Fund, which is expected to open for subscription in the next few weeks.
InvITs that yield as high as 11-12% for now have caught the fancy of yield-hungry international investors. Foreign portfolio investors such as Deutsche Global Infrastructure Fund, Future Fund Board of Guardians (Australian sovereign wealth fund), GIC Singapore, DE Shaw - the world’s fourth largest hedge fund, have invested units in IndiGrid and IRB InvIT.