NHAI to launch third and fourth rounds of InvITs

01 Jun 2023

The National Highways Authority of India (NHAI) has announced plans to launch the third and fourth rounds of Infrastructure Investment Trusts (InvITs) in the current financial year (2023-24) with the goal of raising more than Rs 200 billion.

The third tranche of InvIT is expected to be released in June, with NHAI aiming to raise Rs 120 billion through this offering. The delay in the third round was due to taxation issues, which were resolved by the government in March of this year.

In the Union Budget for the fiscal year 2024, the government initially proposed taxing income distributed by business trusts like Real Estate Investment Trusts (REITs) and InvITs in the form of debt repayments for unitholders. However, the government later decided to provide relief to investors by treating business distributions as a return of capital.

The InvIT is a crucial component of the National Monetization Plan, which aims to monetize road projects. The initial portfolio of the InvIT includes five toll roads with a combined length of 390 kilometers, located in Gujarat, Karnataka, Rajasthan, and Telangana. These roads have been granted new concessions ranging from 15 to 30 years.

In December 2019, the Union Cabinet approved the NHAI's proposal to establish an InvIT and monetize national highway projects. This move allows NHAI to monetize completed national highways with a minimum of one year of toll collection history. NHAI also retains the right to levy tolls on the identified highways.

The first NHAI InvIT attracted anchor investors, namely the Canadian Pension Plan Investment Board and Ontario Teachers' Pension Plan, who each acquired 25 per cent equity in the trust.

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