State-run National Highways Authority of India (NHAI) is planning to raise up to Rs 4,000 crore for its infrastructure investment trust (InvIT), which is set to accelerate road asset acquisition, likely by forming a new special purpose vehicle under the trust structure.
While half of the funds may be raised by selling units in the InvIT to existing investors including Canadian pension funds CPPIB and OTPP, the rest of the money is likely to come from a public bond sale in the local market where retail investors can buy, said people familiar with the matter.
Existing offshore funds are not yet formally informed about the plan.
“The plan has been chalked out for the two-legged fundraising,” one of the people told ET. It is in an early stage with the sponsor, NHAI, preparing a roadmap for the same.
National Highways Infra Investment Managers is managing the InvIT, National Highways Infra Trust.
The NHAI did not comment on the matter. Individual investors could not be contacted immediately for comment.
The two Canadian funds own 25% each in an existing special purpose vehicle (SPV) under the InvIT, which holds about half a dozen road assets. Obtaining new road assets will create space for adding more overseas investors. Under current rules, a foreign investor cannot hold more than 25% in an SPV.
The National Highways Infra Investment Managers has issued a request for proposal for the appointment of lead managers for part of the fundraising.
About three weeks ago, the NHAI offered an additional three roads aggregating 247 kilometres to its InvIT as part of the government’s monetisation strategy.
In October last year, it had launched its first privately placed InvIT, raising more than Rs 5,000 crore. ICICI Securities, Kotak Investment Banking and SBICap had helped raise the money.
NHAI InvIT’s units were listed on the National Stock Exchange and BSE the following month at Rs101, with an enterprise value of Rs 8,012 crore.
The NHAI InvIT had announced distribution of Rs 0.79 paisa per unit to its unitholders for the year ended March 31, 2022.
Initially, the InvIT had a portfolio of five operating toll roads with an aggregate length of 390 kilometres in Gujarat, Karnataka, Rajasthan and Telangana.
There are about 15 registered InvIT in India, in various sectors including electricity transmission, road and renewable energy projects. Those are mostly private, barring a few publicly listed instruments.
These trusts, according to a Moody’s note, are gaining traction amid India’s infrastructure spending plan. India aims to spend Rs 111 lakh crore on infrastructure over 2020-2025 and asset monetisation has been identified by the government as a key pillar for sustainable infrastructure financing.
In a typical InvIT transaction, the asset owner transfers multiple operational assets with a long concession period to a trust that then issues units to investors for raising capital. The capital can be used to create more assets, pay dividends to sponsors and repay debt.