The National Highways Authority of India (NHAI) is expected to place its first set of road projects with an infrastructure investment trust (InvIT) in May. Institutional investors and private funds will be offered equity in the projects. Finalizing an InvIT is a lengthy process. A date-wise action plan would be put in place in order to make the first such offering operational by May this year, a senior NHAI official told Business Standard.
InvIT is a scheme similar to mutual funds that paves the way for investment in infrastructure projects from individuals and institutional investors.
On December 11,2019,the Union Cabinet gave its approval to NHAI to set up an InvIT to monetize highway assets. In January 2020, Union road transport and highways minister Nitin Gadkari unveiled the road map for InvIT, through which NHAI would initially raise 15000-20000 crore.
NHAI InvIT would be the center's first such offering. Government-controlled Power Grid Corporation of India (PGCIL) is in the process of placing some of its transmission projects in an InvIT.
NHAI's offer is part of the central government's plans to tap alternative sources of financing to boost public spending in the infrastructure sector. This is especially at a time when private sector investment is drying up in the build,operate and transfer (BOT) mode. Under the BOT model, the initial cost is borne by the developer, though at the time of bidding it can ask for government subsidy.
The InvIT Trust will hold assets either directly or through a special purpose vehicle or a holding. It will also facilitate a corpus from special institutions and prompt them to stay invested in the infrastructure sector.
InvIT is a scheme similar to mutual funds that paves the way for investment in infrastructure projects from individuals and institutional investors.
On December 11,2019,the Union Cabinet gave its approval to NHAI to set up an InvIT to monetize highway assets. In January 2020, Union road transport and highways minister Nitin Gadkari unveiled the road map for InvIT, through which NHAI would initially raise 15000-20000 crore.
NHAI InvIT would be the center's first such offering. Government-controlled Power Grid Corporation of India (PGCIL) is in the process of placing some of its transmission projects in an InvIT.
NHAI's offer is part of the central government's plans to tap alternative sources of financing to boost public spending in the infrastructure sector. This is especially at a time when private sector investment is drying up in the build,operate and transfer (BOT) mode. Under the BOT model, the initial cost is borne by the developer, though at the time of bidding it can ask for government subsidy.
The InvIT Trust will hold assets either directly or through a special purpose vehicle or a holding. It will also facilitate a corpus from special institutions and prompt them to stay invested in the infrastructure sector.
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