MC EXCLUSIVE Rs 2 lakh crore worth of road assets up for monetisation in next 5 years, says Vertis Infra Trust CEO

Vertis Infrastructure CEO Gaurav Chandna .

Vertis Infrastructure Trust, a KKR-backed roads infrastructure investment trust (InvIT), now manages assets worth Rs 26,000 crore, boosted by the country's largest-ever acquisition last year.

In an interview to Moneycontrol, Vertis Infrastructure Trust CEO Gaurav Chandna said InvITs have “democratised” infrastructure investing by offering investors stable, inflation-hedged yields with strong governance.

As more road InvITs line up to list on bourses, Chandna offers insights into what lies ahead for the sector, the impact, if any, of lower interest rates and the reasons for growing investors' interest in infrastructure investment trusts. Edited excerpts of the interview:

Family offices, high net-worth individuals (HNIs), corporate treasuries and other domestic investors having been going big on InvITs. What is driving this interest?

Infrastructure investing used to be an exclusive domain of large global infrastructure and pension funds. InvITs have changed that. They’ve democratised the asset class, enabling Indian investors to own a fraction of infrastructure at the click of a button.

Domestic interest has surged because InvITs combine predictable, inflation-hedged yields with regulatory safeguards and direct exposure to India’s infrastructure growth story.

For family offices and HNIs, InvITs provide annuity-like quarterly cash flows that sit well alongside traditional portfolios.

For corporate treasuries, they offer a more rewarding alternative to debt markets, with the added advantage of liquidity through stock exchange listing.

The product itself has matured. After a few years of steady distribution and proven performance, investors have greater confidence in the structure, governance, and transparency of InvITs.

SEBI’s reforms such as lowering the minimum ticket size to Rs 25 lakh have further broadened access, while tax-efficient distribution structures enhance post-tax returns.

Finally, the governance framework gives a lot of comfort. Infrastructure projects are packaged into a relatively low-risk structure: assets are mostly revenue generating, portfolios are typically AAA-rated, cash flows are pooled, leverage is capped by regulation, and there’s a mandatory 90% distribution of net cash flows. Combined with independent trustees, quarterly reporting, and transparent valuation processes, InvITs provide investors with the same level of assurance they expect from listed companies, if not higher. Further, InvIT Board consist of minimum 50% of independent directors which enhances investor confidence.

There are also strong tailwinds. The government’s National Monetisation Pipeline (NMP), NHAI’s asset monetisation, and robust sectoral activity ensure a healthy pipeline of roads and transport assets for InvITs. This creates long-term growth visibility for investors.

Put together, InvITs today offer domestic investors a rare combination of predictable and stable yields, diversification benefits, governance discipline, and the chance to participate in India’s infrastructure build-out, all in a format that was earlier out of reach.

Several developers are creating their InvITs and transferring roads to those InvITs. Does this create a shortage of asset supply for InvITs like yours, which are sponsored by funds and don't have their own assets? Where do you see the supply of new roads coming from?

Not at all. Highways InvITs aren’t facing a supply crunch. On the contrary, we expect the sector to witness an opportunity surge over the next three–five years, with Rs 1.5–2 lakh crore of operational road assets available for monetisation.

India has doubled the length of national highways with four lanes and above over the past decade and this momentum is set to continue.

The NHAI alone has the highest budgetary allocation among all sectors, with an annual capital expenditure outlay of Rs 2.5 lakh crore — almost equivalent to the combined AUM of all highways InvITs in India. In addition, several states are implementing their expressway development programmes, potentially contributing another Rs 50,000 crore of annual capital expenditure.

With such robust underlying growth, highways InvITs have barely scratched the surface and could potentially triple their AUM by 2030.

A substantial portion of HAM (hybrid annuity model) projects is with developers who aim to recycle capital rather than hold assets long-term. While some large developers may channel projects into their InvITs, the overall HAM monetisation pipeline is so large that a few developer-led InvITs do not materially impact the opportunity size. There remains a broad universe of developers and EPC players seeking credible platforms like ours for monetisation.

Beyond the private sector, the NHAI continues to be the single-largest supplier of assets, including through its TOT programme.

It is believed that, enthused by the success of NMP 1.0, the government is likely to roll out NMP 2.0, which is expected to be more ambitious, with a target of Rs 10 lakh crore, of which highways are likely to remain the mainstay. We also expect certain state authorities to launch their own monetisation initiatives in the coming years.

Also Read: 3 IPOs in pipeline, KKR’s Asia infra fund set for up to $700 million in exits

With more than a dozen road InvITs already in place, do you think that the space is saturated and consolidation is in the offing?

The highways sector naturally has the largest share in the InvIT space, as it accounts for the highest capital expenditure in infrastructure. Today, highway assets make up about 40 percent of all InvITs, and this could easily grow to 60 percent as the sector expands.

It’s true that there are more than a dozen highways InvITs now, but they differ widely in size from Rs 5,000 crore to Rs 40,000 crore and in their business models, including independent InvITs such as Vertis, developer-backed ones, and those reliant on sponsors.

This variety means there is room for many highways InvITs to operate alongside each other. Investors also benefit, as they can choose the InvIT that best matches their risk appetite, goals, and expectations.

As in any industry, some InvITs are likely to outperform and become investor favourites. Scaled InvITs, with full teams and resources, can innovate, leverage technology, and create additional value for investors.

At Vertis, for example, we have undertaken several initiatives to enhance performance and efficiency: we use innovative materials for major maintenance—such as SMA (Stone Matrix Asphalt) and plastics—which not only improve pavement quality and longevity but also lower life-cycle costs. We have also built a robust treasury function, managing a ₹10,000 crore loan book diversified across sources and benchmarks, while maintaining one of the lowest borrowing costs among highways InvITs.

Consolidation is not inevitable but it could happen if there are clear opportunities to combine strengths and achieve synergies. Until then, the space is broad enough to support multiple players, each with their own niche.

The road InvIT sector is far from saturated. There is plenty of room for growth, innovation, and differentiation, benefiting both investors and asset owners alike.

What kind of toll collection growth has your portfolio seen and what do you expect in the coming quarters?

Over the past six years, our toll road portfolio has delivered a steady and resilient performance that we take pride in. Traffic has grown at a compounded rate of over 6 percent, while revenues have expanded at nearly 11 percent CAGR, consistently outpacing the national average by at least 100 basis points. This growth has not come in spurts but has been sustained year after year, reflecting the underlying strength of the assets.

A large part of this performance stems from the composition of our revenue base. Nearly three-fourths of toll collections are derived from commercial vehicles, making our portfolio a direct mirror of India’s consumption and industrial growth story. This alignment with the broader economy not only supports consistent growth but also provides resilience against short-term fluctuations in traffic.

Our portfolio has been carefully curated to balance diversification with strong regional drivers. Assets are strategically positioned across catchment areas that benefit from port-led cargo flows, key industrial hubs, long-haul logistics corridors, and even tourism-linked traffic. This strategy has ensured steady compounding of volumes and revenues despite varying regional dynamics.

How do you see interest rates impacting demand for InvITs, given that the US Fed is expected to cut rates soon, which will likely have a bearing on RBI’s interest rate decision?

Lower interest rates are generally positive for the InvIT industry, as they help reduce borrowing costs and make yield products more attractive relative to fixed income.

For road InvITs in particular, the impact of interest rate movements is somewhat moderated because of the way revenues are structured. Our portfolio blends toll roads, where revenues are inflation-linked, with HAM assets, where annuity payments are tied to prevailing interest rates. This creates a natural hedge — when rates move up or down, the cash flows adjust accordingly, providing stability to investors.

For Vertis, this balanced portfolio of toll and HAM assets ensures resilience across cycles. Lower rates would certainly be beneficial in terms of cost of capital but even in a higher rate environment, our distributions remain stable due to prudent debt structuring and the intrinsic quality of our assets.

On the global front, the US Fed’s expected cuts are being watched closely, but small adjustments are unlikely to materially affect RBI’s stance on headline interest rates. Only a sharp cut, say beyond 75 basis points, may have a meaningful impact on India’s policy direction. In either scenario, our portfolio is well-positioned to deliver stable cash flows and resilient returns for investors.

What is the differentiating factor that sets Vertis apart amid so many roads InvIT in the market?

Vertis stands out in India’s highways InvIT space through four core pillars: scale, discipline, innovation, and a forward-looking mindset.

With approximately ₹26,000 crore of assets under management, Vertis has delivered five-fold growth since inception, demonstrating the ability to execute large and complex transactions, including marquee deals like PNC and TOT 16, across private and NHAI monetizations. Our portfolio is carefully balanced: one-third annuity assets provide stable cash flows, while two-thirds toll projects offer upside potential. Strong operational teams and robust processes, have allowed us to deliver distributions of ₹47 per unit in under three years, translating to approx. ₹16 annually.

Discipline is at the heart of our approach focusing on risk-reward associated with each deal. This selectivity ensures we remain patient while growing. At the same time, we embrace continuous innovation—optimizing operations, maintenance, and financing. Small, meaningful improvements add up to significant impact, reflecting Vertis’s commitment to operational excellence and long-term value creation.

Are Vertis' sponsors planning any more secondary stake sale given the investor demand?

Our recent secondary stake sale of ₹2,800 crore was the largest transaction in the InvIT space, underscoring the strong investor demand and confidence in Vertis.

From a capital structure standpoint, Vertis is in a comfortable position with leverage at around 40%. With adequate debt headroom, we do not foresee any need for a primary capital raise in the near term. Our immediate focus remains on driving value creation, ensuring stable distributions, and pursuing sustainable growth for our unitholders. As far as any future secondary sale is concerned, that decision rests entirely with the sponsor and unitholders.