Snapshot: NHAI is set to release the third tranche of InvIT in June, with a target to raise Rs 12,000 crore through this offering.
In December 2019, the Union cabinet approved NHAI’s establishment of an InvIT to monetize national highway projects.
Under this monetization initiative, the assets are transferred to an InvIT, where investors contribute funds and receive dividends from generated income.
NHAI (National Highways Authority of India) has ambitious plans to launch the third and fourth series of Infrastructure Investment Trusts (InvITs) in the fiscal year 2023-24, with the aim of raising more than Rs 20,000 crore.
According to reports, the third tranche of InvIT is scheduled for release in June, and NHAI aims to generate Rs 12,000 crore through this offering.
The third phase of InvIT faced a delay due to taxation concerns, but the government resolved these issues in March this year.
Initially, the Union Budget for FY 23-24 proposed taxing income distributed by business trusts, including REITs (Real Estate Investment Trusts) and InvITs, as debt repayments in the hands of unitholders. However, the government later decided to reduce the burden on investors and classify distributions from businesses as a return of capital.
In addition to InvIT, the Ministry of Road Transport and Highways (MoRTH) monetizes its assets through project-based financing and the toll-operate-transfer (TOT) model.
These models provide investment opportunities in highway and associated infrastructure assets for various types of investors.
According to a senior government official, MoRTH aims to generate Rs 35,000 crore from asset monetization this financial year, surpassing the previous target of Rs 32,855 crore.
In December 2019, NHAI received approval from the Union cabinet to establish an InvIT and leverage national highway projects for monetization purposes.
The objective was to facilitate the monetization of fully completed national highways with a minimum toll collection history of one year, while retaining the authority to levy tolls on the designated highways.
Under this initiative, the assets are transferred to an InvIT, where investors contribute funds and receive dividends from the generated income.
The highways involved in this monetization initiative are located in Gujarat, Karnataka, Rajasthan, and Telangana. NHAI has granted new concessions of 15-30 years for these roads.
For the first NHAI InvIT, the Canadian Pension Plan Investment Board and Ontario Teachers’ Pension Plan acted as anchor investors, each acquiring 25% equity.
NHAI’s launch of the third and fourth series of InvITs showcases their commitment to raising funds and leveraging the potential of national highway projects for monetization purposes.