Shrem Group aims to double its road portfolio to Rs 15,000 crore

MUMBAI: Mumbai-based Shrem Group, a family wealth investment office, is looking to double its asset portfolio in the road sector to Rs 15,000 crore under its infrastructure investment trust commonly called InvIT.

The government's push for rapid growth in the infrastructure sector will catalyse a massive fund flow in the Infrastructure Investment Trusts, Nitan Chhatwal, CMD of Shrem Group told ET. Over the next five years, InvITs have the potential to raise around $100 billion in fresh resources from domestic and global sources, he added. These investors include insurance firms, mutual funds, pension funds, and sovereign funds from across the world.

Established in 2011 by Nitan Chhatwal, the Group invests across the infrastructure, real estate, telecom, healthcare, and hospitality sectors and has successfully created an operational portfolio of 24 road assets since 2017.

The InvIT platform provides an opportunity for community ownership of infrastructure assets in India that will help release a considerable amount of capital locked in these assets in the form of debt from banks and other financial institutions. There is a market of close of Rs 2 lakh crore of road annuity assets for Shrem InvIT to acquire completed revenue-generating projects.

More than $400 billion has been invested in equity and debt mutual funds in India over the last two decades. The InvITs, being recognised as an alternate hybrid investment vehicle to debt and equity, are going to witness a much larger participation by investors.

The successful listing of Power Grid InvIT gives massive comfort to investors looking for superior to fixed deposit return but are averse to taking equity risk. The Rs 7,735 crore issue of Power Grid InvIT witnessed an overall demand in excess of Rs 30,000 crore. Power Grid provides 9.4% pre-tax IRR and 6.5-7% post-tax IRR. At the current trading price of Rs 111, the returns adjust to 8.5% pre-tax and 6% post-tax in the hands of the individual investors.

Two more InvITs from the road sector are expected to raise nearly Rs 6,000 crore in the current quarter. NHAI is looking at mobilising a little over Rs 5,100 crore. Shrem Group is planning to mop up Rs 600 crore for its InvIT.

"We aim to create an independent platform for conservative investors who are looking for superior and secured return at negligible risk in the road sector. We are developer agnostic and will acquire assets at arm's length following best corporate governance practices."

Our current portfolio of 24 road projects across India with different counterparties provides a diversified revenue mix. Shrem's 85% of current revenue is based on the government's annuity, therefore providing clear visibility. It's a hybrid instrument providing a handsome return of the pre-tax annualised return of 10% and a post-tax annualised return of 9%.