The National Highways Authority of India (NHAI) is planning to raise around Rs 400 billion to monetise its highway assets through Infrastructure Investment Trust (InvIT) after an approval from the Union Cabinet in December, two people aware of the development said.
NHAI has identified hundreds of completed road projects valued at around Rs 60,000 crore that could be pooled in and offered to investors through InvIT, said one of the persons in the know.
“These are completed projects and have a good track record. These projects would be transferred to InvIT and it could be taken to either large investors like pension funds or public money could be raised,” he said.
InvITs are like mutual funds where investors are allotted units on which they earn some returns. InvITs can either be public or privately placed, but have to be listed on an Indian stock exchange. The government is looking to offer anywhere between 60 per cent and 70 per cent of the completed road projects to the investors, said another person in the know. The government could look at a public offer for the InvIT, although the entry barrier for an investor could be Rs 1 crore, as per the current regulations.
The government had conducted a cost analysis between InvIT and TOT (Toll-Operate-Transfer) scheme. In the past, the government managed to raise money from investors such as Sydney headquartered Macquarie Group. Macquarie won nine highway road projects under TOT for Rs 9,681crore. According to one of the persons in the know, there is a feeling that even smaller investors could participate and invest in InvIT.
“ToT has some benefits, like there is no additional cost when assets have to be transferred to the new structure (for InvIT). Yet, here is a feeling that the government could do better through InvIT as it retains control,” said one of the persons quoted earlier.
Industry trackers said several investors could also prefer InvIT due to the transparency after Securities and Exchange Board of India’s (Sebi) clarification.