NHAI InvIT plans to raise Rs 7,500 crore from CPP Investments, OTPP, others

NHAI Invit plans to raise about Rs7,500 cr from CPP Investments, OTPP, others

The National Highways Infra Trust, the infrastructure investment trust (InvIT) sponsored by the National Highways Authority of India (NHAI), plans to raise as much as Rs 7,500 crore through a fresh issue of InvIT units to fund the acquisition of new roads from its sponsor, people aware of the development told Moneycontrol.

InvITs are trusts that manage income-generating infrastructure assets that offer investors regular yield and a liquid method of investing in them.

The funds being raised will help the acquisition of road assets worth Rs 15,600 crore, spread across the states of Assam, Madhya Pradesh, West Bengal, Uttar Pradesh and Karnataka.

NHAI is working with investment banks SBI Capital Markets, Axis Capital and ICICI Securities for the proposed fundraise, which is expected to close by the middle of the month, the people added.

NHAI, which holds close to an 18 percent stake in the InvIT, plans to invest Rs 1,400-1,500 crore as sponsor commitment. The remaining capital will come from existing and new investors, the people said.

A major chunk of the funds is expected to come from CPP Investments and Ontario Teachers' Pension Plan (OTPP), both existing shareholders in the InvIT, collectively holding about 50 percent stake.

About Rs 2,000 crore is expected to be raised from domestic institutional investors such as insurance and mutual funds, corporate treasuries and family offices, the people said.

Emails sent to NHAI and OTPP did not elicit a response. CPP Investments declined to comment.

NHAI InvIT portfolio

The InvIT currently holds road assets with a length of 636 km acquired through two packages from NHAI. The portfolio has an enterprise value of Rs 11,711.8 crore, as per a company presentation.

NHAI set up its roads InvIT in 2021 to monetise its large portfolio of assets and raise funds to build new highways. It raised Rs 6,011 crore through its InvIT, which saw Canadian pension funds CPP Investments and Ontario Teachers’ pick up 25 percent each as anchor investors.

In the first tranche, NHAI transferred five road projects of 389 km with an enterprise value of Rs 8,011 crore to the InvIT. These roads were located in Gujarat, Rajasthan, Maharashtra, Karnataka, Andhra Pradesh and Telangana, with a tolling revenue of over Rs 460 crore in FY21.

In the second tranche, the NHAI InvIT acquired three road assets of about 247 km with an enterprise value of Rs 3,787 crore.

NHAI uses routes such as outright sale of toll concessions under the toll-operate-transfer (ToT) model, toll securitisation, and the InvIT to monetise assets.

Road InvITs

InvITs have emerged as a popular structure for investors to hold operating infrastructure assets. Highways are one of the most popular assets.

Private equity investors such as KKR and Actis and construction companies including IRB Infrastructure Developers and Oriental Infrastructure have set up road InvITs in recent years.

KKR sponsored the Highways Infrastructure Trust on January 16 and said it is acquiring a dozen road projects from PNC Infratech and PNC Infra Holdings for a total enterprise value of Rs 9,005.7 crore.

Also in January, Actis filed draft papers with the market regulator to raise as much as Rs 1,900 crore through an InvIT of its road portfolio.