NHAI readies draft prospectus for first InvIT; aims to raise at least INR 5100 cr


The National Highways Authority of India (NHAI) on Monday filed draft papers with markets regulator SEBI to set up an Infrastructure Investment Trust (InvIT) to raise INR 5,100 crore.

NHAI plans to raise a total of INR 5,100 crore through fresh issue, as per the draft papers filed with the Securities and Exchange Board of India (Sebi). There would also be an offer-for-sale, in addition.

An infrastructure investment trust is an investment instrument that works like mutual funds and are regulated by the Securities and Exchange Board of India that provides investors with a steady yield derived from cashflows from operating infrastructure projects such as roads, transmission lines or renewable energy projects.

The InvIT is part of NHAI’s plans to mobilise resources by realising value from operational road assets.

The NHAI has been selling toll concessions of operating roads to financial investors under the toll-operate-transfer (TOT) model.

Earlier this year, in January, another state unit PowerGrid Corp of India Ltd filed the draft paper for the initial public offering of its InvIT through which it envisions to raise as much as INR 8,000 crore through both primary and secondary share sales.

While PowerGrid is planning an IPO of its InvIT, NHAI’s InvIT will likely be a privately placed one.

While Sebi notified regulations for InVITs and REITs (Real Estate Investment Trusts) in 2014, only a few such trusts have listed their units in the country so far. It is widely expected that InvIT offerings by high quality sovereign backed institutions such as the NHAI and PowerGrid would give a boost to this category, attract long term patient foreign capital and help infrastructure companies mobilize resources for building new projects.

In May 2017, road developer IRB Infrastructure Developer Ltd rolled out the first IPO for an infrastructure investment trust—IRB InvIT Fund—raising INR 5,033 crore. Transmission projects developer Sterlite Power Grid launched the IPO of its infrastructure investment trust—India Grid Trust—raising INR 2,250 crore.

The primary objective of InvITs is to bolster and promote the infrastructure sector of India by encouraging more individuals to invest in it.

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