The third round of highway monetisation through National Highways Infra Trust (NHIT) will take place in September and it won’t involve debt mobilisation from the public, according to official sources. As far fund-raise via InVIT is concerned, 51% is mobilised as equity and the balance as debt.
The third NHIT round was originally slated for March 2023, but has been pushed back.
While the government is also considering allowing retail investors to buy units of InvIT, it may take more time. Currently, investments in units of InvITs, which are mutual fund-like instruments that pool money for infrastructure, are open to institutions only.
The retail participation in InvIT units could be possible after two or three more rounds of fund-raising, an official said. Regulatory approvals need to be in place.
In the second round of InVIT in October last year, Rs 1430 crore was raised through public issue of non convertible debentures, under the debt component. In that round, 246 km of highways were monetised for Rs 2,850 crore.
The Government wants to institutionalise debt raising from the public for highways monetisation but in the upocoming round of InVIT, this route won’t be used.
“In the third round due to the paucity of time the debt would be raised from institutions and not the public,” the official who did not wish to be named said.
In acquisitions through InVIT, 51% of the funds comes from equity and 49% from debt. NHAI being the sponsor subscribes to units to maintain its unitholding of at least 15%. In the past subscribers to InVIT units have included Canada Pension Plan Investment Board, Ontario Teachers’ Pension Plan Board, State Bank of India, mutual funds and insurance companies.
In the third round of InVIT six stretches of highways of 635 km length will be monetised for Rs 7000-8000 crore. This transaction which was to happen in March was delayed as the union budget on February 1 proposed new rules for taxation of infrastructure investment trusts and real estate investment trusts. The clarity on the rules came at the time of passing of finance bill in March-end which led to the transaction being rolled over to this financial year.
The new deadline for completion of the transaction was July but even that was crossed.
For the full 2023-24 the NHAI expects to raise around Rs 15000 crore by monetisation through InVIT.
Last financial year Rs 2850 crore was raised by monetising 246 km of highways through InVIT while in the year before that 387 km stretches were transferred to NHAI InvIT for Rs 7350 crore.
Asset monetisation in the highway sector is getting a big push as NHAI’s dependence has increased manifold after it was barred from the debt market. The total debt of NHAI has touched Rs 3.48 trillion. Its interest servicing cost comes to 18% to 20% of the allocation from the budget.
Monetisation will make more funds available to NHAI as it takes on a higher burden of highway development because the private sector has retreated from the sector.