Retail exposure: NHAI to seek public listing of InvIT

To rope in such investors, analysts said, NHAI has two avenues – launching a public-listed InvIT or issuing bonds, both tax-free and taxable, either in the books of the NHAI or at the special purpose vehicle (SPV) level. The government has refrained NHAI from borrowing this fiscal as its debt mounted to Rs 3.5 trillion at the end of 2021-22.

Retail exposure: NHAI to seek public listing of InvIT
The idea is to allow small retail investors to take part in its asset monetisation programme and help them maximise returns on their savings, lying mostly in low-yielding bank deposits.

The National Highways Authority of India (NHAI) will soon approach market regulator Securities and Exchange Board of India (SEBI) for a special permission to convert its existing privately-held infrastructure investment trust (InvIT) into a public one.

The idea is to allow small retail investors to take part in its asset monetisation programme and help them maximise returns on their savings, lying mostly in low-yielding bank deposits.

Sources in the NHAI said the existing guidelines for conversion of the nature of the InvIT has “very high threshold” as it requires existing investors to be locked-in for one year. The conversion also requires support from all existing investors, totalling a little over 80 now.

Through its maiden InvIT launched in October last year, NHAI raised Rs 6,100 crore from institutional investors. The InvIT holds 390 km road assets. The NHAI is in the process of adding another 247 km into it.

“The intent is to make the present InvIT public. However, this is unlikely to materialse in the next 1-2 months. We are yet to approach SEBI,” said a NHAI source.

The NHAI’s intent to convert the existing InvIT public stems from the ministry of road transport ministry’s idea of taking on board small retail investors on its asset monetisation platform. Minister for road transport and highways Nitin Gadkari on Tuesday said government would raise funds from small investors tapping the capital market. Such investors would get a guaranteed return of “more than 8%”.

To rope in such investors, analysts said, NHAI has two avenues – launching a public-listed InvIT or issuing bonds, both tax-free and taxable, either in the books of the NHAI or at the special purpose vehicle (SPV) level. The government has refrained NHAI from borrowing this fiscal as its debt mounted to Rs 3.5 trillion at the end of 2021-22.

While analysts said that subscribing taxable bonds for a retail investor does not make much sense since the tax component is very high, a senior NHAI official said the authority is not contemplating issuance of tax-free bonds at the moment. The plan to launch a public-listed InvIT exclusively for retail investors is also not there on the table.

“To launch a public-listed InvIT, we will have to recreate the entire eco-system – trust, project manager, etc. As of now, the plan is that there will be one InvIT only which will eventually go public at some point of time. We are working on it, but it is subject to SEBI approval. We will go for that,” said the official.

The monetisation proceeds are used to lay newer highway stretches and retire debt. The NHAI has drawn up a plan to monetise 21,700-km stretch in the next three years. Apart from InvIT, NHAI monetises its assets through toll-operate-transfer (TOT) mode and toll securitisation.

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