NEW DELHI : The National Highways Infra Trust (NHIT), the infrastructure investment trust of the National Highways Authority of India (NHAI), proposes to rope in retail investors as partners in road sector projects by offering them equity in completed projects, Suresh Goyal, managing director and chief executive, NHIT, said.
He said that the process to involve retail investors in road projects has begun with the launch of a ₹1,500 crore-non-convertible debenture (NCD) issue where retail investors get 25% reservation on subscription that could be raised, depending on the interest.
“The next step would be to have an equity issue of the InVIT where retail investors would be allowed to subscribe. But this will have to wait for some time as we want to ascertain retail interest in our debt instruments first. Also, we would like the road projects to mature further and start providing steady revenue streams with rising traffic, before a much stable equity investments avenue is provided to retail investors to participate in country’s infrastructure growth story,” Goyal said in an interview.
InvITs raise money from the public to invest in infrastructure projects such as roads and ports and, in return, offer dividends to unit-holders. The new initiative is expected to deepen the asset monetization market in the roads sector.
So far, all road sector InvITs have been private trusts and only institutional investors such as insurance companies, pension funds and other financial institutions have participated by subscribing to units.
Goyal said he expects the current NCD issue to be fully subscribed in just three-to-four days’ time and that if retail interest is higher the share of other categories such as high net-worth individuals (HNIs) and institutions could be reduced to provide a higher share of debentures to retail investors.
Goyal said after the current second round of fund-raise that included raising ₹1,217 crore from investors in its follow-on offer earlier this month and the NCD issue now, the third round of monetization including debt and equity issue for 138 km of completed highways may happen in January-February next year.
The enterprise value of the these three completed road projects is about ₹3,500 crore.
“NHAI has said it would monetise about 1,500 km of highways in next three years. This presents potential for further fund-raising exercise under the InVIT route giving more opportunities for investors, including retail ones, to participate in attractive road assets,” Goyal said.
“We are just scratching the surface now as the National Monetization Pipeline finalised last year has given the highest target of ₹1.6 trillion for the road sector. This will present enough assets to be monetised under InVIT route,” he added.
With regard to the NCD issue, Goyal said that it has been designed in such a way so as to give the maximum advantage to investors to trade.
The NCD issue having a face-value of ₹1,000 each has been divided into three parts to make the redemption easier and phased.
The total tenor of the debenture is 25 years but it will have three separately transferable and redeemable principal parts.