In an attempt to provide public funds for infrastructure development, the Ministry of Road Transport and Highways plans to launch a dozen road and highway InvITs that will raise funds from small investors, with returns backed by guarantees. sovereign.
Road Transport and Highways Minister Nitin Gadkari told Mint that about 10 public InvITs with different categories and geographies of road projects will be launched in phases, with the first such project expected in the next month, which will collect funds from the public and integrate them. success of India’s road development program in the country.
“The plan is to raise money for highway development from the public to expand the highway InvIT investment basket which largely gets money from long-term institutional investors, insurance and pension funds and private equity firms. The public can get assured returns on these investments, which helps them benefit from the country’s infrastructure development program,” Gadkari told Mint on the sidelines of the Mint Mobility Conclave.
Public InvIT has so far eluded the road sector and the new initiative is expected to further deepen the asset monetization market in the road sector. Until now, all InvITs in the road sector were private trusts. To onboard retail investors into such trusts and launch assured income plans would require a nod from market regulator Sebi.
According to MoRTH officials, the proposal is pending with the Securities and Exchange Board of India and once clearance from the regulator is obtained, which may happen soon, the plan for several public InvITs will be launched.
The initial plan is to bring retailers and small investors into the completed roads. This would be done with government-sponsored InvITs offering retail investors guaranteed returns of 8% on a minimum investment of ₹1,000,000. Such returns would be backed by a sovereign guarantee, providing maximum security for retail investors.
It is worth mentioning that the National Highway Authority of India has a project bank of 20,000 km of completed roads and there are roads where traffic has stabilized over a period of time. NHAI itself offers these roads in bundles and will offer projects worth ₹40,000 crore over the next two fiscal years.
The government has also sought approval from SEBI to operationalize a new asset monetization plan under which all future operational road projects would be offered only through the bidding route to InvITs to obtain proper valuations. and better yields.
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