Foreign pension funds looking to invest in Indian highways

The government is looking to raise support for investment in the highways sector; and reportedly according to experts, foreign pension funds would be its best bet. The reasoning behind this is that unlike private firms, global pension funds are eager to invest in long duration projects, which make them the best bet for highway contracts scheduled to be auctioned in August. The certainty of RoI is the primary attraction for global pension funds. They are risk-averse when it comes to construction-related risks but are prepared to make longer-term investment in road infrastructure. It is known that when in the past private firms exited NH projects, Cube Highways and other foreign funds availed equity in the projects worth about Rs 4,150 crore. Also, in 2016, the Cabinet Committee on Economic Affairs had given NHAI the go-ahead to monetize 111 public-funded projects to reduce NHAI’s involvement in the same. Around 75 publicly-funded NH projects have been zeroed-in on for potential monetisation under the TOT model. The money generated from such projects can also be used for development of Indian highways. This model is expected to offer an efficient framework for operation and maintenance, thereby reducing the involvement of NHAI in projects that have been already completed.