NHAI Considers Public InvIT to Broaden Investor Participation

In a bid to raise public funds and expand investor participation in its asset monetisation drive, the National Highways Authority of India (NHAI) is exploring the possibility of launching a public infrastructure investment trust (InvIT). This move comes after its success with a private InvIT model and forms a part of its long-term strategy to boost capital inflow, especially from retail investors.

Public InvIT May Open Roads to Retail Investment

The NHAI said on Monday it is “considering a public InvIT to increase the overall investor base, develop a competitive environment in the InvIT market, and mitigate the risk of a limited investor base. Further, a public InvIT will also cater to retail investors, thereby providing access to infrastructure assets,” as mentioned in its Asset Monetisation Strategy Report.

This initiative aligns with the vision of Union Highways Minister Nitin Gadkari, who has consistently advocated for citizen participation in India’s infrastructure expansion. “He wants the citizens of the country to benefit from the rapid infrastructure expansion in the country. 

This will happen by investment in highway projects via InvITs,” the report quoted. However, despite the intention, officials have clarified that the process remains complex and heavily regulated. NHAI has not confirmed whether it will decisively move forward with the public InvIT.

Transparency and Targets Shape Road Ahead

InvITs remain one of the three main monetisation routes used by NHAI. Under this structure, investors become unit holders in a trust that manages multiple road assets, benefiting from toll revenues generated by those assets.

So far, NHAI has made a significant contribution to the National Monetisation Pipeline, achieving ₹1.15 trillion out of the ₹1.6 trillion road sector target set for FY21- 25 by NITI Aayog. Overall highway monetisation currently stands at ₹1.4 trillion. The highway ministry is also expected to receive the highest target in the upcoming second monetisation phase, extending up to FY30, with an expected goal of ₹3.5 trillion.

The report also addressed the contentious issue of the initial estimated concession value (IECV). In 2020, the authority had stopped disclosing the IECV of toll-operate-transfer (TOT) bundles to avoid bid clustering. While the sector insisted on transparency, NHAI opted to share only the assumptions behind the IECV. It now plans to make this disclosure model more transparent.

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Conclusion

The consideration of a public InvIT by NHAI reflects its intent to diversify funding sources and bring retail investors into the infrastructure growth narrative. With large monetisation goals ahead, enhancing transparency and public participation could play a critical role in achieving them.

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