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Highway to Wealth: NHAI Paves the Way with Record Rs. 16,000 Crore Road Monetization Deal

In a landmark achievement, the National Highways Infra Trust (NHIT), under the aegis of the National Highways Authority of India (NHAI), has successfully concluded a colossal fund-raising event, dubbed ‘InvIT Round-3’. This historic initiative has resulted in the monetization of national highway stretches spanning a robust 889 kilometers, amassing an enterprise value surpassing Rs. 16,000 crore. This monumental feat not only marks the largest monetization endeavor by the NHAI but also stands as one of the most significant transactions in the annals of India’s road sector history. The declaration of this groundbreaking success was made following the issuance of the Letter of Acceptance (LOA) last month, in February 2024, to usher in the highest ever concession value through ‘InvIT Round-3’.

In this third monetization saga, NHIT has skillfully harnessed unit capital to the tune of approximately Rs. 7,272 crore, sourced from a blend of prestigious domestic and international investors. Additionally, a debt component of around Rs. 9,000 crore has been secured from Indian lenders. This strategic financial orchestration aims to fund the acquisition of national highway stretches, anchored on a base concession fee of about Rs. 15,625 crore, alongside an added concession fee totalling Rs. 75 crore. The investor community, through a book build process, eagerly subscribed to the units at a cutoff price of Rs. 124.14 per unit, which notably exceeds the current NAV of Rs.122.86 per unit, demonstrating robust demand and investor confidence.

The investment allure of NHIT’s units attracted a diverse array of investors, including heavyweight foreign pension funds like the Canada Pension Plan Investment Board and the Ontario Teachers’ Pension Plan Board, alongside domestic pension and provident funds, insurance companies, mutual funds, banks, and others. The NHAI itself claimed approximately 15% of the units, participating at the same competitive price, reflecting a shared commitment to the venture’s success.

This third round of monetization brings the total realized value of all three rounds of InvIT to an impressive Rs. 26,125 crore. NHIT now boasts a diversified portfolio of fifteen operating toll roads, collectively stretching about 1,525 km across nine Indian states, with concession periods ranging from 20 to 30 years.

Established in 2021, the NHIT represents a cornerstone initiative of the Government of India’s National Monetization Pipeline, exemplifying a successful public-private partnership (PPP) model. This initiative has positioned NHIT as a vanguard entity in the InvIT space, instrumental in channeling financial capital towards the burgeoning development of the Indian roads sector.

Echoing the sentiment of triumph, Anurag Jain, Secretary of the Ministry of Road Transport & Highways, lauded NHIT’s pivotal role in supporting the National Monetization Pipeline. Santosh Kumar Yadav, NHAI Chairman, and Suresh Goyal, MD of the Investment Manager of NHIT, also expressed their satisfaction and gratitude towards the stakeholders for their unwavering support and confidence, underscoring NHIT’s ongoing commitment to the development of India’s road infrastructure.

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