The IRB InvIT Fund has six special purpose vehicles (SPVs), consisting of operational toll-road assets across Maharashtra, Gujarat, Rajasthan, Karnataka and Tamil Nadu. These are either wholly or majority owned by IRB. The InvIT aims to raise Rs5,035 crore, with the offer at the Rs 100-102 price band. Analysts estimates suggest that at the upper price band of the IPO (Rs 102), the dividend yield on the InvIT would be around 12%.

IRB Infrastructure would be the sponsor of the fund, and a project manager will manage the operations of the InvIT. The company plans to use funds raised in part to repay Rs. 3,350 crore worth of debt on its balance sheet. This would bring the consolidated debt-to-equity ratio from 3 down to 1.8. 

As per SEBI rules, at least 90% of funds collected by the trust, after paying for expenses, taxes and repayment of external debt, should be passed on to investors every six months.

But there are risks to these returns.

1) The regulatory framework around these trusts is brand new and untested in India. The IRB InvIT is the very first to launch. Possibly due to this, SEBI has required a minimum investment of Rs. 10 lakh to participate in this InvIT, which would discourage widespread retail investor participation.

2) IRB will be unable to continue the operation of a particular road concession without a continuing concession right from the NHAI. Such a concession may be revoked by the NHAI for reasons mentioned in the relevant concession agreement. An NGO has already made appeals to the MH government to stop toll collection on the Mumbai Pune Expressway, which is operated by one of IRB's subsidiaries.

3) Decline in traffic on the toll projects: While this is a smaller risk considering that overall traffic growth in India is trending sharply up, traffic volumes are unpredictable overall. Any declines in traffic volumes would impact the financial condition of these SPVs.