Private Invits to get exclusive bid rights for TOT highways
also requesting anonymity.
The official added that NHAI has been asked to carve out road bundles that could be auctioned to private Invits in the next financial year (2024-25) once a new government takes office at the Centre after the general elections.
Queries sent to the road ministry remained unanswered till press time.
According to ICICI Direct, as of December 2023, there are only 22 Invits in India even though Sebi launched Invits in 2014. Some of these are Cube Highways Trust, India Infrastructure Trust, IRB Infrastructure Trust, and Indinfravit Trust. Most of these Invits either directly participate in the auction of TOT projects that are open for all (developers, Invits, fund houses, etc.) or get projects that are transferred by their parent highway development companies. There is no separate window for Invits to acquire completed road projects.
“Some existing listed private Invits are directly participating in the TOT bids by NHAI; having a bid where Tots are exclusively offered to Invits will probably reduce competition as developers and funds (such as sovereign wealth funds) would not be able to participate in such bids,” said Maadhav Poddar, Partner—infrastructure Practice, EY India.
“Having said that, given that the cost of capital for Invits is likely to be lower compared to developers and funds, the money generated on such bids may be comparable to the existing TOT bids. Secondly, such a structure will obviate the need for developers/ funds to first acquire the TOT bundles and then flip into Invits,” Poddar added.
The government has identified three modes for monetization of its vast highway assets. First, offering projects to private sector developers for running under TOT route; second, through Invits (so far direct offering only to NHIT); and third, securitization of future toll earnings. But TOT route remains the mainstay of the monetization exercise.
Since its launch in 2018, NHAI has successfully completed six rounds of the road asset (bundle of roads) monetization through TOT mode and raised ₹26,366 crore. Letters of authority (Loas) are issued under TOT bundles 11, 12, 13 & 14, and realization of ₹15,968 crore concession fee is expected in FY24. The Loas for these four TOT bundles were issued by NHAI within one day of opening of their respective financial bids. Total asset monetization under this model is expected to be ₹42,334 crore by the end of the current fiscal.
NHAI set up an INVIT under the Sebi INVIT Regulations, 2014, in which NHAI has 16% stake apart from main investors—canada Pension Plan
Investment Board (CPPIB) and Ontario Teachers’ Pension Plan (OTPP).
In the three rounds of monetization by NHIT (the third round, biggest so far, was completed just a week ago), the total realized value of the INVIT stands at ₹26,125 crore, and it holds a diversified portfolio of 15 operating toll roads with an aggregate length of about 1,525 km spread across the nine states of Assam, Gujarat, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan, Telangana, Uttar Pradesh and West Bengal, with concession periods ranging between 20 and 30 years.
To safeguard investors’ interest, Sebi mandated Invits to invest at least 80% of their total assets in completed infrastructure projects that can generate income.