Turning Roads Into Revenue: NHAI Raises Rs 16,000 Crore From 889 Km Highway Monetisation

The National Highways Authority of India (NHAI) announced the successful conclusion of the monetisation process for 889 kilometres of national highways valued at Rs 16,000 crore in its third round of ‘InvIT' (Infrastructure Investment Trust).

This achievement, facilitated through the National Highways Infra Trust (NHIT), marks NHAI's largest monetisation effort to date and stands as one of the largest transactions in India's road sector history.

NHIT, an infrastructure investment trust sponsored by NHAI, raised approximately Rs 7,272 crore in unit capital from prominent domestic and international investors, alongside securing around Rs 9,000 crore in debt from Indian lenders.

The funds will be allocated towards acquiring national highway stretches. The investment trust model operates akin to mutual funds, pooling resources from investors to invest in assets generating cash flows over time.

In this funding round, existing and new investors showed robust interest, including foreign pension funds such as the Canada Pension Plan Investment Board and Ontario Teachers’ Pension Plan Board.

Domestic pension and provident funds, insurance companies, mutual funds, banks, and NHAI itself subscribed to units, with NHAI acquiring 15 per cent of the units at the same price.

With the conclusion of the third monetisation round, the total realised value from all three rounds of InvIT amounts to Rs 26,125 crore. This includes 15 operating toll roads spanning approximately 1,525 kilometres across nine states with concession periods ranging from 20 to 30 years, reports Mint.

An Infrastructure Investment Trust (InvIT) is like a mutual fund, which enables direct investment of money from individual and institutional investors in infrastructure projects to earn a portion of the income as a return.

Established in 2021, NHIT was created to support the government's National Monetisation Pipeline, exemplifying a successful public-private partnership (PPP) model. Since November 2021, NHIT has raised Rs 12,000 crore in the first two rounds of monetisation, acquiring eight operating road assets covering 636 kilometres from NHAI.