CPPIB and Ontario Teachers' Pension Plan bag NHAI's maiden InvIT

CPPIB, Ontario Teachers' Pension Plan will be anchor investors of Rs 6k-cr issue

The Canadian Pension Plan Investment Board and Ontario Teachers’ Pension Plan will be the anchor investors of the much-awaited Infrastructure Investment Trust (InvIT) of the National Highways Authority of India (NHAI), and will pick up 25 per cent equity each in the Rs 6,000-crore issue.

Apart from the anchor investors, NHAI will retain a minimum of 15 per cent equity, while the rest will be offered to domestic institutional investors, the firm announced on Wednesday. The InvIT, which was launched on October 29 and closed on November 2, is a private placement instrument for international and domestic institutional investors.

Launched as part of the National Monetisation Plan (NMP) to monetise the NHAI’s road projects, the InvIT has an initial portfolio of five operating toll roads located in Gujarat, Karnataka, Rajasthan, and Telangana with an aggregate length of 390 kilometers. Additionally, the NHAI has granted new concessions of 30 years for these roads.

InvITs are investment trusts that work like mutual funds and are regulated by the Securities and Exchange Board of India (Sebi). Assets are placed in the InvIT and investors put in money. The income generated from these assets is paid as dividend. The money raised will be used for further investment in the road sector. Part of the toll revenue will, however, be used for operation and maintenance.

In view of the long-term nature of the assets, units of the NHAI InvIT were offered to international and domestic institutional investors.

The total enterprise value of the five roads was pegged at Rs 8,011.52 crore, which includes a debt of Rs 2,000 crore from the State Bank of India, Axis Bank, and the Bank of Maharashtra. The rest is being funded through the issue.

The InvIT piqued the interest of international pension funds and a diversified group of domestic institutional investors comprising pension funds, insurance companies, mutual funds, banks and financial institutions, which have submitted bids worth Rs 6,203 crore.

“The NHAI InvIT is part of the government of India’s NMP announced earlier this year and has significant potential to scale up in future with additional roads being monetised through the InvIT. [It] is expected to provide attractive long-term returns to its investors. Participation by marquee international and domestic investors will also benefit the InvIT in the areas of governance, transparency and quality maintenance of national assets,” said Giridhar Armane, secretary of the Ministry of Road Transport and Highways of India and chairman of NHAI.

The InvIT’s launch, earlier scheduled for May 2020, was put off because of the Covid-19 crisis and the nationwide lockdown imposed on March 25, 2020.