NHAI Set To Launch Third And Fourth Series Of InvIT, Aiming To Raise Over Rs 20,000 Crore

The National Highways Authority of India (NHAI) intends to launch the third and fourth series of Infrastructure Investment Trusts (InvITs) during the current fiscal year 2023-24, aiming to raise more than Rs 20,000 crore.

According to reports, the third tranche of InvIT is scheduled for release in June, with NHAI planning to generate Rs 12,000 crore through this offering.

Due to taxation concerns, the third phase of InvIT faced a delay, but the government resolved these issues in March of this year.

In the Union Budget for FY 23-24, the government initially suggested taxing income distributed by business trusts, including REITs (Real Estate Investment Trusts) and InvITs, as debt repayments in the hands of the unitholders.

However, the government later opted to reduce the burden on investors and proposed to classify distributions from businesses as a return of capital instead.

The Ministry of Road Transport and Highways (MoRTH) monetises its assets under three different modes. Along with InvIT, it includes — project-based financing, the toll-operate-transfer (TOT) model.  

These models offer a chance for all types of investors to invest in highway and associated infrastructure assets.

Following earlier reports, MoRTH intends to generate Rs 35,000 crore from asset monetisation this financial year — exceeding the previous target of Rs 32,855 crore, according to a senior government official.

In December 2019, the NHAI received approval from the Union cabinet to establish an InvIT and leverage national highway projects for monetisation purposes.

The objective was to facilitate the monetisation of fully completed national highways with a minimum toll collection history of one year, while retaining the authority to levy tolls on the designated highways.

Under this monetisation initiative, the assets are transferred to an InvIT, where investors contribute funds and receive dividends from the income generated.

The roads are situated in Gujarat, Karnataka, Rajasthan and Telangana. NHAI has granted new concessions of 15-30 years for these roads.

For the first NHAI InvIT, the Canadian Pension Plan Investment Board and Ontario Teachers' Pension Plan served as the anchor investors by acquiring 25 per cent equity each.