Auction for the second TOT bundle, with 586km of national highways in Rajasthan, Gujarat, West Bengal, and Bihar at a base price of Rs5,362 crore, got cancelled last year after the bids offered were much below NHAI expectation.
Confirming the development, NHAI chairman Sukhbir Singh Sandhu said, “Out of the 5 highway stretches identified, a few may require upgradation. The tentative value is Rs.4700 crore of the InvIT Projects, for a concession period of 30 years, with the InvIT undertaking the capacity augmentation.” This figure may undergo a change as we refine the estimates, he added.
“The National Highway Authority of India is in touch with various investors for funding the ongoing programs. We are at the moment sounding out investor interest in our proposed InvIT issue,” he said.
As part of launching the InVIT, NHAI has hired Suresh Goyal, former India Head & Senior Managing Director, Macquarie Infrastructure and Real Assets – MIRA (India) as the MD & CEO of the upcoming InvIT. Besides Goyal, the newly set up board consists of B Sriram, (former Managing Director & CEO of IDBI Bank) as chairman, Shailendra N Roy (former director at L&T Group) and MP Sharma as independent directors.
Suresh Goyal, a veteran in infrastructure space, had quit Macquarie Group in June this year. Under Goyal, Macquarie Group had won the first ever ToT auction by NHAI to manage 648km of national highways by bidding Rs 9,682 crore in 2018.
“In the matter of resource generation for the ongoing projects of NHAI, including a major initiative like the Bharatmala program, asset recycling is important. NHAI has a sizable inventory of income generating assets which can be opened out to investors for generating resources. Whether it be InvIT or TOT, both are facets of this strategy of asset recycling,” said Sandhu.
About 10 InvITs were registered under SEBI till date that includes Digital Fibre Infrastructure Trust (DFIT), a trust that holds all the fibre assets of RIL; India Grid Trust (Sterlite Power Grid Ventures); Brookfield sponsored India Infrastructure Trust; MEP Infrastructure Investment Trust; IRB InvIT Fund; Tower Infrastructure Trust; IndInfravit, sponsored by L&T Infrastructure Development Projects; and Delhi-based infrastructure firm Oriental Structural Engineering (OSE).
“InvIT offers a bouquet of assets to investors to assess and for sponsors it offers a ready-made launchpad to sell assets. Given, many developers aim to monetise the assets with sufficient vintage, this could be a platform for stable and cash generating assets. Sponsors with debt laden balance sheets will find this structure attractive, however the upshot of the InvIT is contingent on returns and debt serviceability of the pool,” said Siva Subramanian, Director & Head – Infrastructure & Project Finance, India Ratings & Research.
Infrastructure trusts, or InvITs, are popular among investors of long-term revenue-generating assets like toll roads and power-transmission projects.
InvITs enable a large number of investors to pool their money for investments into operational infrastructure assets in return for regular dividends. Since the operating infrastructure assets provide stable and longterm yields under the InvIT structure, global investors have been keen on such entities floated by domestic entities.