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NHAI gets Cabinet approval to set up InvITs

Under InvIT, highway projects will be bundled to form a special purpose vehicle (SPV) to be offered to investors. The SPV would then be traded on the stock exchanges, and returns will be linked to the InvIT’s performance in the capital market. InvIT as an instrument provides greater flexibility to investors and is expected to create specialized O&M.

, ET Bureau|
Dec 11, 2019, 07.35 PM IST
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NHAI's InvIT will be a Trust established by NHAI under the Indian Trust Act, 1882 and Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014.
New Delhi: The Union Cabinet on Wednesday authorised the National Highways Authority of India (NHAI) to set up Infrastructure investment trust (InvIT), a move which will allow the authority to monetise completed national highways, and meet its funding requirements.

Under InvIT, highway projects will be bundled to form a special purpose vehicle (SPV) to be offered to investors. The SPV would then be traded on the stock exchanges, and returns will be linked to the InvIT’s performance in the capital market.

InvIT as an instrument provides greater flexibility to investors and is expected to create specialized O&M concessionaires, attract patient capital for around 30 years to the highways market, an official government statement said.

“Retail domestic savings and corpus of special institutions to be invested in infrastructure sector through InvIT,” the statement added.

“Using new and innovative financing vehicles has become inevitable for organisations like NHAI that have limited existing sources of funds,” the statement added.

NHAI has been actively working on setting up an InvIT to monetize its completed and operational national highways projects with the objective of mobilizing additional resources through capital markets, the government said.

NHAI's InvIT will be a Trust established by NHAI under the Indian Trust Act, 1882 and Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014.

NHAI has received a total of Rs 36,691 crore as budgetary support and has been authorised to raise Rs 75,000 crores from the market in the current financial year.

Given the magnitude of the Bharatmala, the government’s flagship highway development program, NHAI would need adequate funds to complete the projects within the prescribed timelines, the government said.

“As a part of this exercise, a workable option is to monetize the completed and operational NH assets to unlock their value and offer attractive schemes to private players to invest in construction of National Highways,” the statement said.

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