The National Highways Authority of India’s delayed infrastructure investment trust will likely be launched after rules for insurance and pension fund investments in InvITs are liberalised, people aware of the matter told Moneycontrol.
NHAI has had discussions with insurance and pension funds and has decided to wait for the investment limits of such funds to be relaxed, the people said. The authority wants to get long-term investors onboard its InvIT, which is expected to raise Rs 5,100 crore in the first round.
The government is revising the investment norms for such funds and the process could take a month, officials said.
Niti Aayog, the policy think-tank, had asked the government last month to streamline investment limits for insurance and pension funds in InvITs to promote their active participation in infrastructure projects.
Under the current norms, insurance funds are not allowed to invest in unlisted InvITs. They can invest a maximum of 3 percent of the fund’s size. Pension funds under the Employees’ Provident Fund Organisation are allowed to invest up to 5 percent of the fund size, and mutual funds can invest up to 10 percent of their assets under management in a single InvIT.
“The long-term nature of infra projects requires active participation from investors looking at a similar return profile from their investments. However, the existing investment guidelines for insurance and pension funds limit the exposure of such funds to InvIT/real estate investment trust assets,” Niti Aayog said in the guidebook of the National Monetisation Pipeline.
Niti Aayog also suggested that tax incentives should be provided to attract investments in InvITs.
The Securities and Exchange Board of India in May approved the draft prospectus submitted by the National Highways Infra Investment Managers, which will manage the NHAI InvIT.
Three top Canadian pension funds, including Caisse de dépôt et placement du Québec, and leading local insurers such as Life Insurance Corporation of India and HDFC Life are among frontline investors likely to buy into the NHAI InvIT, the Economic Times reported in August.
Former NHAI chairman Sukhbir Singh Sandhu had said on April 1 that the first tranche of the InvIT would be launched by mid-May. However, the second wave of Covid-19 delayed the plan due to a fall in road toll collections and movement restrictions in various parts of the country.
NHAI decided it would launch its InvIT once highway traffic returns to normal, its officials had told Moneycontrol.
“A sharp fall in toll collections in May coupled with predictions of a third wave of Covid-19 led to uncertainty among investors looking at the road sector,” a company official said at the time.
Highway traffic and toll collections returned to pre-Covid levels in August and September. Toll collections through FASTag stood at Rs 3,076.56 crore in August and Rs 3,009.30 crore in September, in line with Rs 3,086.32 crore in March, before the second wave of the pandemic.
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