Bharat Highways InvIT the first publicly listed InvIT with only HAM assets: Management

How different is this offering versus other listed invits such as IRB? What is the internal rate of return?

This is the first publicly listed InvIT in India with all HAM assets, making it unique. It offers fixed annuity income from NHAI (National Highway Authority of India), with returns distributed to unit holders after expenses and debt servicing. As of now, there's no other listed InvIT in India with all HAM assets consolidated under one entity.

Regarding IRR, it's challenging to provide an exact figure during the book building process. However, it's projected to be approximately 350-400 BPS higher than 12 or 13-year AAA paper, or around 430-440 BPS higher than 10-year paper. This unique asset class offers investors exceptional returns not found elsewhere.

Another unique feature is the ROFO (Right of First Offer) agreement with GR Infra, a listed player with assets worth over Rs 12,000 crore. This agreement will transfer 23 additional HAM assets to the InvIT, along with future developments by GR over the next five years. This ROFO proposition ensures incremental revenue growth and extends the InvIT's lifespan, making it an attractive investment opportunity.

But why just HAM? Why not some different business model? What's the rationale behind this move?

HAM is a model where you have fixed annuities. And it ensures my cash availability. Because we know that this is a fixed sum we are going to receive from NHAI and this is what we are going to get, and this is what we can pay to our unit holders. If we tap different asset class like toll and all, then a kind of variability layer gets added. So, that's the reason if we want to look at, say, toll assets, it should have a traffic history of at least three to five years. ... It is the minimum requirement to see, to assess, to evaluate what is going to be the exact toll revenue, and then accordingly, see if that can be taken at the InvIT level. Any kind of deviation is something that is not InvIT. That's the reason we are not that focused on toll now, but yeah, it can be looked at as and when it comes.

The company has stated a negative figure of around Rs 106 crore and Rs 309 crore for FY24 and FY25. Tell us about your DPU (distribution per unit) Guidance.

So, these assets are a bit unique, as they generate fixed cash flow from NHAI, qualifying as financial assets under India's accounting. From a simplicity perspective, let's focus on EBITDA. For FY25, EBITDA is estimated at around Rs 1,005 crore, dipping to Rs 975 crore in FY26. This dip is due to receiving only 37 out of 210 annuities across the seven assets, reducing the weighted average concession period from 15 to 12 years. However, to address this, we propose a ROFO to acquire new assets under the InvIT, ensuring additional revenue. So, while a dip is currently observed in the seven assets transferred to the InvIT, the addition of ROFO assets may offset this decrease.

In terms of DPU guidance, it's going to be quarterly, and it is going to be in the range of 11-11.25 percent.