New Delhi Government plans to monetise additional completed highway projects of 500 km 8,000 crore over the next six months through Infrastructure Investment Trust or InvIT.
In October, the government, through the National Highways Authority of India (NHAI), monetised a road bundle of 390km by transferring it to NHAI’s InvIT. So far, NHAI has raised about 7,000-8,000 crore through this route.
In an interview, Road Transport and Highways Secretary Giridhar Armane said that this year two bundles of road assets of 500 km (about 250 km each) were identified for monetization through NHAI InvIT. While the first bundle of about 250km has already been approved for shifting to NHAI InvIT, Aramane said the price of the next batch of around 250km complete road assets Around October-November, InvIT will be offered Rs 4,000 crore.
He said that all these roads are highway assets of NHAI with a track record of high toll revenue amidst increasing traffic.
More projects will be considered for monetization under the InvIT route this year, but a decision will be taken in the last quarter based on investor appetite.
The Ministry of Road Transport and Highways is studying the proposal to offer NHAI road projects to other operational road sector InvITs instead of only to NHAI InvITs. Major private sector InvITs include the Brookfield-sponsored India Infrastructure Trust; MEP Infrastructure Investment Trust; IRB InvIT Fund; Tower Infrastructure Trust; and IndInfravit, sponsored by L&T Infrastructure Development Projects.
The secretary said the government is planning to take road sector InvITs public by allowing retail investors to purchase units after obtaining regulatory approval from market regulator Securities and Exchange Board of India (SEBI).
Apart from InvITs, monetization in the road sector will also include about 1,750 km of NHAI assets that could be passed on to investors under the toll-operate-transfer route in FY13. However, Armane said that toll securitization, which involves raising funds from investors based on future toll revenue, may not happen this year or be conducted on a lesser scale, and most of the monetization is through InvIT and TOT routes. have to be
Roads are an important part of the National Monetization Pipeline (NMP). Last year, the central government had identified national highways and road assets 1.6 trillion will be monetized by 2024-25.
InvITs are investment instruments similar to mutual funds, giving individual and institutional investors the opportunity to invest in infrastructure projects and earn a small portion of the property’s income in return.
They typically enable developers of infrastructure assets to pool multiple properties under a single entity (a trust) and sell them to investors.
This type of infrastructure trust is popular among investors, especially with long-term revenue-generating assets such as toll roads, as it helps provide stable and long-term returns. Analysts expect Road InvIT to deliver 9-12 per cent annualized returns over the long term.
India has seen several issuances under the InvIT structure, with government entities like POWERGRID and NHAI also running InvITs.