NHAI InvIT to replace urban with rural roads
ROADS & HIGHWAYS

NHAI InvIT to replace urban with rural roads

The Infrastructure Investment Trust (InvIT) by the National Highways Authority of India (NHAI), which is expected to enter the market by the end of this fiscal year, is likely to undergo changes to suit the prospective bidders better.

The Union government is awaiting approval from the market regulator Securities and Exchange Board of India (Sebi).

The road stretches in the urban areas, which were part of the earlier InvIT offering, have been removed in the proposal and replaced with the roads in rural areas. One reasoning behind this proposal is that it may attract toll and other revenues, while urban areas generate revenues on their own and therefore may not require funding via the InVit.

InvITs are like mutual funds that enable direct investment of small amounts of money from a possible individual or institutional investors in infrastructure to earn a small portion of the income as a return. In the model, assets are put in an InvIT where investors place money and income generated from such assets is paid as a dividend.

The InvIT mechanism is being brought in to generate funds from foreign and domestic institutional investors. Five operational roads have been identified to be transferred to InvIT. Placement memorandum is under progress, and the issue may take place in March 2021 to raise expected funds to the tune of Rs 5,000 crore, the road transport ministry said in an official statement.


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Overall, the NHAI has identified around 19 projects worth Rs 35,000 crore for fundraising under this route. NHAI has received a good response from investors such as Life Insurance Corporation (LIC), the Canadian pension fund, and National Infrastructure Investment Fund (NIIF) for its InvIT.

In December 2019, the Union Cabinet had allowed the NHAI to set up an InvIT. It approved of setting up the trust under the Indian Trust Act, 1 1882, and in compliance with the SEBI (Infrastructure Investment Trusts) Regulations, 2014.

It also gave the NHAI the flexibility of holding assets under the trust directly, or through a special purpose vehicle/holding company of the NHAI.

The money raised through such monetisation will be used for further investment in the road sector. A part of the toll revenue will be used for operation and maintenance.

NHAI has sponsored one InvIT that will attract domestic and international institutional investors. As many as five operational roads at an estimated enterprise value of Rs 5,000 crore are being transferred to the NHAI InvIT.

Image: NHAI has identified around 19 projects worth Rs 35,000 crore for fundraising


Also read: Govt-sponsored infra investment trust by March

The Infrastructure Investment Trust (InvIT) by the National Highways Authority of India (NHAI), which is expected to enter the market by the end of this fiscal year, is likely to undergo changes to suit the prospective bidders better. The Union government is awaiting approval from the market regulator Securities and Exchange Board of India (Sebi). The road stretches in the urban areas, which were part of the earlier InvIT offering, have been removed in the proposal and replaced with the roads in rural areas. One reasoning behind this proposal is that it may attract toll and other revenues, while urban areas generate revenues on their own and therefore may not require funding via the InVit. InvITs are like mutual funds that enable direct investment of small amounts of money from a possible individual or institutional investors in infrastructure to earn a small portion of the income as a return. In the model, assets are put in an InvIT where investors place money and income generated from such assets is paid as a dividend. The InvIT mechanism is being brought in to generate funds from foreign and domestic institutional investors. Five operational roads have been identified to be transferred to InvIT. Placement memorandum is under progress, and the issue may take place in March 2021 to raise expected funds to the tune of Rs 5,000 crore, the road transport ministry said in an official statement.Make in Steel 202124 February Click for event info4th Indian Cement Review Conference 202117-18 March Click for event info Overall, the NHAI has identified around 19 projects worth Rs 35,000 crore for fundraising under this route. NHAI has received a good response from investors such as Life Insurance Corporation (LIC), the Canadian pension fund, and National Infrastructure Investment Fund (NIIF) for its InvIT. In December 2019, the Union Cabinet had allowed the NHAI to set up an InvIT. It approved of setting up the trust under the Indian Trust Act, 1 1882, and in compliance with the SEBI (Infrastructure Investment Trusts) Regulations, 2014. It also gave the NHAI the flexibility of holding assets under the trust directly, or through a special purpose vehicle/holding company of the NHAI. The money raised through such monetisation will be used for further investment in the road sector. A part of the toll revenue will be used for operation and maintenance. NHAI has sponsored one InvIT that will attract domestic and international institutional investors. As many as five operational roads at an estimated enterprise value of Rs 5,000 crore are being transferred to the NHAI InvIT.Image: NHAI has identified around 19 projects worth Rs 35,000 crore for fundraising Also read: Govt-sponsored infra investment trust by March

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