India is taking a major step toward widening public participation in highway financing, with the National Highways Authority of India (NHAI) set to launch its maiden public infrastructure investment trust, the Raajmarg Infra Investment Trust (RIIT).
The proposed public InvIT, announced by the ministry of road transport and highways (MoRTH), is expected to deepen the government’s road-asset monetization pipeline and bring retail, pension and domestic institutional investors directly into the funding of national highways.
This will be NHAI’s second InvIT after the National Highway Infra Trust was set up in 2020 as a private InvIT.
As part of the new initiative, NHAI has incorporated Raajmarg Infra Investment Managers Pvt Ltd (RIIMPL) as the investment manager. The entity was launched in Mumbai by NHAI chairman Santosh Kumar Yadav, the ministry said.
RIIMPL is a collaborative venture with equity participation from leading banks and financial institutions, including State Bank of India, Punjab National Bank, NaBFID, Axis Bank, Bajaj Finserv Ventures Ltd., HDFC Bank, ICICI Bank, IDBI Bank, IndusInd Bank and Yes Bank.
The partnership aims to unlock the monetization potential of the National Highway assets while creating a high-quality, long-term investment product primarily targeting domestic retail investors.
V. Umashankar, secretary of MorTH said the trust is likely to be up and running by early next year and may raise close to ₹7,000-8,000 crore from its public issue before the end of current fiscal year in March.
The first issuance of InvIT units for retail and public investors is expected to be launched in February, said a MoRTH statement.
“The projects to be assigned to the proposed InvIT is being finalized after which fund raising exercise would be done. The idea is also to allow retail investors to subscribe to units of the InvIT, for the very first time,” the secretary said. “Our focus is to get domestic pension funds and state pension funds to invest in units of the prosed InvIT.”
He said NHAI will hold 15% equity in the new InvIT as its sponsor, while balance equity up to a 50% level may be subscribed by the banks joining the InvIT. Though there would be no specific reservation for retail investors during the first round of fund raising by the InvIT.
Rajendra Kumar, member (finance) at NHAI, has been appointed as the managing director and chief executive officer (additional charge) of the investment manager company.
“NHAI has established a robust record in asset monetization. In recent years, we have successfully monetized assets worth ₹48,995 crore through the toll-operate-transfer (TOT) model and raised around ₹43,638 crore across four rounds of private InvITs, attracting major domestic and international investors,” NHAI chairman Santosh Kumar Yadav said.
“Over the next three-five years, around 1,500 km of completed and operational National Highways will be introduced into the public InvIT, opening substantial investment avenues for the public. I am sure that this initiative will mark a new chapter of public participation in building the National Highway infrastructure in the country,” he added.
RIIMPL will focus on establishing robust governance standards, fully aligned with SEBI’s InvIT regulations, ensuring transparency, investor protection, as well as best-in-class reporting and compliance frameworks.
“Financialization of infrastructure assets can play a transformative role in meeting the sector’s large and long-term funding requirements. It also opens the door for retail investors to participate in India’s infrastructure build-out, allowing them to benefit from the stable, annuity-like returns these assets typically generate over time,” said Jagannarayan Padmanabhan, senior director & global head of consulting at Crisil Intelligence.