NHAI panel to appoint investment manager for INVIT

The National Highways Authority of India (NHAI) has initiated the process of setting up an infrastructure investment trust (INVIT) to scout for funding in the highways sector. As part of the structure, it will set up a company to act as an investment manager to the proposed INVIT.

This will be a collective investment scheme, through which individuals and institutional investors may invest in infrastructure projects directly. A panel has been formed to select the investment manager, the NHAI informed on Thursday.

In such a model, assets are placed in an INVIT where investors put in money. Income generated from such assets is paid as dividend.

The idea is to set up a competent entity of experts to professionally run the trust. This will enable it to mobilise resources from the market in order to monetise completed highway projects.

Sukhbir Singh Sandhu, chairman of the NHAI, has been appointed convenor of the committee. Other members are Deepak Parekh, chairman of HDFC; Girish Chandra Chaturvedi, chairman of ICICI Bank; and Sanjay Mitra, former secretary, Ministry of Road Transport & Highways.

Given that this would be the first INVIT to be sponsored by a government or semi-government entity, it is important to have a professional management structure, said an official statement.

The NHAI plans to offer 19 projects worth ~35,000 crore under the INVIT model, of which three projects worth ~5,000-6,000 crore are expected to be taken up first.

This INVIT is the NHAI’S second asset monetisation model, following the earlier model of placing projects under toll-operatetransfer (TOT). A joint venture of Macquarie and Ashoka Buildcon had bagged the first batch of TOT projects in 2018, after paying an upfront fee of ~9,680 crore for nine national highway stretches.

Later, in December 2019, the Union Cabinet allowed the NHAI to set up an INVIT. It approved of setting up the trust under the Indian Trust Act, 1882, and in compliance with the Securities and

Exchange Board of India (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.

Projects that had attracted toll for at least a year will be placed under the INVIT. The money raised through such monetisation will be used for further investment in the road sector. Part of the toll revenue will, however, be used for operation and maintenance.

It is expected that long-term investors, including pension and sovereign funds, could invest in this INVIT. Further, these projects will be more attractive than greenfield highway stretches, given that there will not be any construction risk associated with them.