NHAI InvIT finally launches InvIT; CPPIB and Ontario Teachers' Pension Plan bag 25 percent stake each

As part of National Monetisation Pipeline, National Highways Authority of India (NHAI) has launched its Infrastructure Investment Trust (NHAI InvIT), the company said in a press statement on November 3.

The InvIT was launched on October 29 and closed on November 2, the company said, adding that Canada Pension Plan Investment Board and Ontario Teachers’ Pension Plan Board have emerged as the anchor investors and will hold 25 percent stake each in the InvIT.

NHAI has issued stakes in its InvIT through the private-placement route at the upper valuation band of Rs 101 per unit. The units will be listed on NSE and BSE, the company said.

The total enterprise value of the five roads was pegged at Rs 8,011.52 crore and NHAI is funding that through a debt of Rs 2,000 crore from State Bank of India, Axis Bank and Bank of Maharashtra.

The balance is being funded by issuing units for Rs 6,011.52 crore to international and domestic institutional investors, with NHAI as sponsor.

Besides the anchor investors, NHAI will retain a minimum of 15 per cent equity and the remaining will be offered to the domestic institutional investors.

Given the long-term nature of road assets, the units of NHAI InvIT were offered to international and domestic institutional investors only.

The InvIT will initially have a portfolio of five operating toll roads with an aggregate length of 390 kilometers, with more roads planned to be added later. These roads are located across the states of Gujarat, Karnataka, Rajasthan and Telangana. NHAI has granted new concessions of 30-years for these roads.

Collective investment

InvIT is an investment trust that works like a mutual fund and is regulated by the Securities and Exchange Board of India (Sebi).

InvITs hold assets and allow investors to participate in their monetisation. The assets generate an income and investors are paid dividends from this income. 

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, because of the fall in road-toll collections from movement restrictions placed across the country. 

In May, the Sebi approved the draft prospectus submitted by the National Highways Infra Investment Managers, which will manage the NHAI InvIT.

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.

As part of the monetisation programme announced by the government, NHAI also plans to sell about 32 more operational road assets spanning 1,500 km as well as upcoming ToT (toll operate transfer) projects.

Ambit Private Limited has acted as a financial advisor to Ontario.