National Highways Authority of India’s (NHAI) second platform for highway monetisation has got approval from the Securities and Exchange Board of India (SEBI) as an Infrastructure Investment Trust (InvIT).
The Raajmarg Infra Investment Trust (RIIT) will be a public InvIT that will also be open to retail and domestic investors. This new set of investors will now be able to subscribe to the equity of the special purpose vehicles (SPVs) floated by RIIT that will acquire highway assets from NHAI.
Democratising Infrastructure
For each round of monetisation through InvIT a SPV is set up. Through the public InvIT NHAI is planning to monetise 1500 km of highways in next three to five years. This will be in addition to monetisation through private InvIT – National Highways Infra Trust (NHIT)
Collaborative Management
Earlier, NHAI had incorporated Raajmarg Infra Investment Managers (RIIMPL) as the Investment Manager for the Raajmarg Infra Investment Trust (RIIT). RIIMPL has equity participation from leading banks and financial institutions, including State Bank of India, Punjab National Bank, National Bank for Financing Infrastructure and Development and Axis Bank. Other investors are Bajaj Finserv Ventures, HDFC Bank, ICICI Bank, IDBI Bank, IndusInd Bank, and YES Bank.
Member (Finance) of NHAI NRVVMK Rajendra Kumar will be the Managing Director and CEO (Additional Charge) of the Investment Manager company.
“The SEBI approval for RIIT represents a significant milestone in expanding public participation in India’s National Highway infrastructure growth,” NHAI Chairman Santosh Kumar Yadav said in a statement while Commenting on SEBI’s approval for the Raajmarg Infra Investment Trust (RIIT),
The public InvIT will be in addition to NHIT – also sponsored by NHAI. Like in the NHIT, the highway builder will also retain 15% of the units of the public InvIT as sponsor.
The public InvITs are open to all investors – including retail – via stock exchanges, while private ones are limited to institutional or high-net-worth investors through private placement.
While NHIT has raised funds once from the public in the past, they were through debt instruments in 2022. In NHIT 50% of the units are held by two Canadian pension funds – Canadian funds Ontario Limited and CPP Investment Board Private Holdings Inc. who hold 25% units each. Other pension funds and mutual funds are another set of investors in NHIT. Employee Provident Fund Organisation (EPFO) came as an investor in the last round of monetisation through NHIT in March.
Through NHIT the NHAI has so far raised Rs 43,638 crore by monetising 2,345 km of road assets.
In the private sector there are already road sector InvITs that have raised money by issuing units through a public offer. With the private InvIT, the NHAI will be able to do two rounds of monetisation through this route. At present only one issue of InvIT is done in a financial year.
