National Highways Infra Trust aims to secure Rs 45 billion via term loan

04 Jul 2023 CW Team

The estimated enterprise value of these assets is expected to exceed Rs 90 billion. This transaction is part of an asset monetization scheme known as toll operate transfer (ToT) arrangement. The funding for the acquisition consists of two components: long-term debt and equity. While the debt amount will be approximately Rs 45 billion, the remaining funds will be raised through equity by issuing infrastructure investment trust (InvIT) units.

The trust, although capable of securing loans of up to Rs 45 billion, is not seeking the entire amount in a single instance.

Initially, it plans to acquire loans worth Rs 35 billion.

According to bankers, two infrastructure lenders, namely the National Bank for Financing Infrastructure and Development (NaBFID) and India Infrastructure Finance Company (IIFCL), are providing loans to the trust. NHAI has established NHIT to hold operational road assets within India.

Previously, NHIT had obtained a debt of Rs 20 billion and capital of Rs 60.11 in order to pay a concession fee of Rs 73.50 billion to NHAI for the initial five assets in the first round of funding during FY22. Subsequently, in FY23, NHIT raised a debt of Rs 23.50 billion and capital of Rs 14.30 billion to pay a concession fee of Rs 28.25 billion to NHAI for the next three assets in the second round. The current round of fundraising involving term loans is part of the third round.

The proposed term loan has been assigned a rating of "AAA" by rating agency India Ratings. The InvIT structure offers diversification benefits. The pooled structure of the InvIT enables cash flows from a total of 13 toll road assets, comprising the existing eight toll road assets and the five proposed assets, as stated by the rating agency.

Also read:
ADB rejects tenders for seven flyovers in ahmedabad
Pathankot-Mandi highway project gets eco clearance

The National Highways Infra Trust (NHIT) announced its plan to raise Rs 45 billion through term loans in order to acquire a portfolio of five operational road assets from its parent organisation, NHAI. The estimated enterprise value of these assets is expected to exceed Rs 90 billion. This transaction is part of an asset monetization scheme known as toll operate transfer (ToT) arrangement. The funding for the acquisition consists of two components: long-term debt and equity. While the debt amount will be approximately Rs 45 billion, the remaining funds will be raised through equity by issuing infrastructure investment trust (InvIT) units. The trust, although capable of securing loans of up to Rs 45 billion, is not seeking the entire amount in a single instance. Initially, it plans to acquire loans worth Rs 35 billion. According to bankers, two infrastructure lenders, namely the National Bank for Financing Infrastructure and Development (NaBFID) and India Infrastructure Finance Company (IIFCL), are providing loans to the trust. NHAI has established NHIT to hold operational road assets within India. Previously, NHIT had obtained a debt of Rs 20 billion and capital of Rs 60.11 in order to pay a concession fee of Rs 73.50 billion to NHAI for the initial five assets in the first round of funding during FY22. Subsequently, in FY23, NHIT raised a debt of Rs 23.50 billion and capital of Rs 14.30 billion to pay a concession fee of Rs 28.25 billion to NHAI for the next three assets in the second round. The current round of fundraising involving term loans is part of the third round. The proposed term loan has been assigned a rating of AAA by rating agency India Ratings. The InvIT structure offers diversification benefits. The pooled structure of the InvIT enables cash flows from a total of 13 toll road assets, comprising the existing eight toll road assets and the five proposed assets, as stated by the rating agency. Also read: ADB rejects tenders for seven flyovers in ahmedabadPathankot-Mandi highway project gets eco clearance

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