The National Highways Authority of India (NHAI) has begun the groundwork for an initial public offering for a highways infrastructure investment trust (InvIT) and has called bids from top law firms to act as the legal counsel to the share sale, sources have told Moneycontrol.
The proposed IPO is likely to see the country's premier highways development authority raise as much as Rs 10,000 crore, making it one of the biggest share sales in the infrastructure sector in recent years, the sources said.
“Last month NHAI had invited bids to appoint a legal counsel to help the authority in setting up the InvIT and to advise on its IPO. The process of appointing a legal counsel is expected to be closed this month,” one of the people cited above said.
This will be the second InvIT from from NHAI, which operates a private InvIT, National Highways Infra Trust (NHIT), anchored by global investors CPP Investments and Ontario Teachers’ Pension Plan.
The finer details of the InvIT such as the assets to be housed under the trust will be worked out at a later date, sources said. Emails sent to NHAI did not elicit a response till the time of publication.
InvITs have emerged as a successful asset monetisation route for NHAI, along with the toll-operate-transfer route, helping the state-backed authority mobilise funds to develop new projects.
The public offering through the InvIT route will add another tool to NHAI’s monetisation strategy, helping it tap a wider pool of investors, including retail investors.
In March, NHAI closed the fourth round of InvIT monetisation, selling road projects worth Rs 18,380 crore on an enterprise valuation basis to NHIT, making it the largest monetisation transaction in the Indian road sector. Over the four monetisation rounds, NHAI has raised more than Rs 46,000 crore.
InvIT IPOs
NHAI’s plans to tap the public market come as such offerings by InvITs are gaining momentum, driven by increasing domestic investor demand for yield-generating investment products.
Moneycontrol reported on July 29 that KKR-sponsored Vertis Infrastructure Trust and I Squared Capital-backed Cube Highways InvIT are planning to launch IPOs, which could see them raise around Rs 5,000 crore each.
“The demand for products such as InvITs has seen a sharp rise among domestic investors such as family offices, high net-worth individuals, corporate treasuries, driving the push for IPOs from asset managers and owners,” one of the sources said.
Recent InvIT IPOs include Capital Infra Trust Rs 1,578 crore share sale in January and the Rs 2,500 crore share of Bharat Highways InvIT in February 2024.
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