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The National Highways Authority of India (NHAI) has announced plans to introduce a public Infrastructure Investment Trust (InvIT), aimed at expanding its investor base by including retail investors alongside institutional players. This initiative follows NHAI's earlier success with a private InvIT that monetised over 2,300 km of highways. NHAI intends to offer three Toll-Operate-Transfer (ToT) bundles quarterly of varying sizes and hold one to two InvIT phases annually, adapting bundle sizes based on market conditions. The move seeks to attract expertise-driven institutional investors and provide broader access to infrastructure assets, under a regulated framework governed by SEBI.
The National Highways Authority of India (NHAI), a government-owned entity, recently revealed its intention to launch a public Infrastructure Investment Trust (InvIT) to broaden the spectrum of investors in its projects. This public InvIT will open doors for retail investors, providing them with direct access to infrastructure assets that were previously limited primarily to institutional investors. Advertisement
NHAI had previously launched a private InvIT, successfully monetising more than 2,300 kilometres of highway assets. An InvIT functions as a pooled investment vehicle that raises funds by issuing units to investors, offering a way to channel investment into infrastructure with stable returns.
According to the NHAI, it plans to offer three Toll-Operate-Transfer (ToT) bundles every quarter one small bundle valued at INR 2,000 crore, a medium bundle worth INR 5,000 crore, and a large bundle sized at INR 9,000 crore. Furthermore, the authority intends to conduct one or two InvIT phases each year to appeal to a diverse group of investors. It also noted that it will monitor market conditions and adjust the sizes of these bundles as required.
To draw high-quality institutional investors and those with expertise in infrastructure management, NHAI will roll out targeted outreach programmes tailored to various geographic regions and investor profiles. Historically, from 2017-18 onwards, NHAI has awarded 11 ToT bundles and three InvIT phases, raising a total of INR 75,000 crore.
The ToT model attracts private capital for the management of completed infrastructure assets in exchange for toll collection rights. Concessionaires securing these rights pay an upfront lump sum to NHAI and undertake operation and maintenance responsibilities over the concession period.
Introduced in India in 2014, InvITs have emerged as an innovative financing instrument that delivers stable and predictable cash flows, low risk, liquidity, diversification, and tax advantages for investors. They enable infrastructure asset owners to pool capital from a wide array of investors who, in turn, benefit from periodic cash flow distributions. These trusts operate under the regulatory oversight of the Securities and Exchange Board of India (SEBI).
The approach not only supports asset monetisation but also encourages sustained private sector involvement in infrastructure upkeep and management, ensuring long-term operational efficiency and financial returns. Ultimately, expanding investor access through regulated InvITs could significantly enhance the development and maintenance of critical infrastructure across the country.
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