The National Highways Authority of India (NHAI) has set the ball rolling on its public Infrastructure Investment Trust (InvIT) that will in 3-5 years hold 1,500 km of highways. The public InvIT will be in addition to the private InVIT – National Highways Infrastructure Trust (NHIT) – also sponsored by NHAI. While creating new avenues for monetisation, the public InvIT will also enable retail investors to benefit from the returns of high revenue generating national highways. Like in the NHIT, the highway builder will also retain 15% of the units of the public InvIT as sponsor.
NHAI is in the process of establishing Raajmarg Infra Investment Trust (RIIT) as a Public InvIT. As part of this initiative, NHAI has incorporated Raajmarg Infra Investment Managers Private Limited (RIIMPL) as the Investment Manager for the proposed InvIT, according to a statement. RIIMPL was launched by NHAI Chairman Santosh Kumar Yadav in Mumbai on Thursday. The Investment Manager is responsible for managing the trust’s assets (which will come through NHAI’s monetisation programme) and ensuring returns for unit holders.
How does an Invit work?
Once an InviT acquires assets after an upfront payment, it gets the right to collect user fees for 20 years. Return for the investors are paid through user fee collection. RIIMPL is a collaborative venture with equity participation from leading banks and financial institutions including State Bank of India, Punjab National Bank, National Bank for Financing Infrastructure and Development (NaBFID), Axis Bank, Bajaj Finserv Ventures Ltd., HDFC Bank, ICICI Bank, IDBI Bank, IndusInd Bank, and Yes Bank, the statement added.
The public InvITs 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 public InvIT, the retail investors will be able to participate on the equity side through purchase of units.
Who are the other investors?
Apart from NHAI, other investors in NHIT are Canadian funds Ontario Limited and CPP Investment Board Private Holdings Inc. with 25% units each. Pension funds and mutual funds are other investors. Employee Provident Fund Organisation (EPFO) came as investors in the last round of monetisation through NHIT in March. In public InvIT too the state pension funds and other long-term investors would be approached.
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.