Financial Insights

IRB Infra’s fundraise peeves investors, but brightens prospects for road projects.

One would have expected a big sigh of relief among investors after IRB Infrastructure Developers Ltd announced its mega fundraiser proposal on Tuesday. Tapping two large overseas investors to garner Rs5,350 crore will alleviate its balance sheet strain, which is a key positive for any infrastructure company.

But investors hammered the stock that was locked in lower circuit, closing 10 per cent lower than Tuesday’s price, in spite of decent September quarter results announced along with the deal.

To be sure, investors do not appreciate equity dilution, which is the sore point in this case. But the deal, which is the largest in India’s road sector till date, brings two infrastructure giants to the table. Cintra is a wholly owned subsidiary of Spain’s Ferrovial group and among the world’s largest road developers. The second is Singapore’s GIC, known for funding long gestation projects and which already has a comfort zone with IRB, following earlier investments in IRB and its InvIT Fund.

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