The government will approach the capital market this month to raise around Rs 2,500 crore to fund three road projects, a senior official said on Monday. The money will be raised through Infrastructure Investment Trusts (InvITs), the government official added. “We will be approaching the capital market this month to raise around Rs 2,500 crore for the three road projects,” he told PTI on the condition of anonymity.
Infrastructure Investment Trusts (InvITs) are instruments on the pattern of mutual funds, designed to pool money from investors and invest in assets that will provide cash flows over a period of time. Last year, the National Highway Authority of India’s first infrastructure investment trust raised more than Rs 5,000 crore.
“NHAI InvIT attracted two international pension funds, Canadian Pension Plan Investment Board and Ontario Teachers’ Pension Plan Board, which along with diversified DIIs invested units worth more than Rs 5,000 crore in InvIT portfolio, which has currently 5 National Highway,” Road Transport and Highways Minister Nitin Gadkari had earlier said.
He further said that subsequently, more national highways will be added to the InvIT portfolio as the long-term revenue-generating assets, such as toll roads, provide stable and long-term yields under the InvIT structure.
InvIT as an instrument provides greater flexibility to investors and is expected to attract patient capital (for say 20-30 years) to the Indian highway market as these investors are averse to construction risk and are interested in investment in assets that provide long-term stable returns. NHAI has the largest share under the National Monetisation Pipeline (NMP) as road assets worth Rs 1.60 lakh crore will be monetised over four years till FY25 under the NMP plan announced by Finance Minister Nirmala Sitharaman in August last year.