The National Highways Authority of India (NHAI) is in advanced talks with investors, including Canada Pension Plan Investment Board (CPPIB) and Ontario Municipal Employees Retirement System (OMERS), to raise ₹5,000-6,000 crore through its first private infrastructure investment trust (InvIT), two people aware of the development said.

This will be the first asset monetization by a state-owned enterprise through the InvIT route, making it a critical exercise for the central government’s coming asset monetization plan through which it aims to raise as much as ₹6 trillion.

InvITs are trusts that manage income-generating infrastructure assets, typically offering investors regular yield and a liquid method of investing in infrastructure projects.

“The talks are in the final stages. CPPIB will be coming in as the anchor investor. OMERS, too, will be investing in the infrastructure investment trust. There are also a couple of domestic institutional investors that are looking to participate. They have tied up around ₹5,000 crore of funds and they are looking at an additional ₹1,000 crore," said the one of the two people, requesting anonymity as he is not authorized to speak to reporters.

“They have already finished work on the final placement document, and this transaction is likely to be closed by the end of the month or early next month," he added.
CPPIB and OMERS declined to comment, while an email sent to NHAI remained unanswered.

NHAI filed draft papers for its proposed infrastructure investment trust in April, outlining plans to raise fresh capital to the tune of ₹5,100 crore, and a secondary sale of units by NHAI.
The infrastructure investment trust portfolio comprises five road assets spread across Gujarat, Rajasthan, Maharashtra, Karnataka, Andhra Pradesh and Telangana, with tolling revenue generation of over ₹460 crore for fiscal year 2021.

Proceeds of the fundraising will be used to infuse debt or equity into the underlying road projects, which will then be used to pay initial estimated concession value to NHAI, and fund improvement and repair costs, according to the draft documents filed by NHAI.

The infrastructure investment trust has the option to acquire more road projects worth around 1,500km of roads from NHAI over the next three years.

Last year, NHAI hired Suresh Goyal, a former India head of Macquarie Infrastructure and Real Assets, one of the biggest infrastructure investors in Asia, to be the chief executive and managing director of the investment manager at the infrastructure investment trust.

NHAI’s infrastructure investment trust will be the second such asset monetization by a state-owned enterprise. In May, PowerGrid Corp. of India Ltd raised over ₹7,700 crore through the IPO of its InvIT of transmission lines.

Road projects have been the most popular assets to be monetized through the infrastructure investment trust route since the product took off in 2017.

IRB Infrastructure Developers, L&T Infrastructure Development Projects Ltd and Shrem group have monetized road projects through this route.

Last month, Mint reported that roads platform Cube Highways is in talks with pension funds and sovereign wealth funds to raise as much as $1 billion through an InvIT, which will comprise the largest portfolio of privately held road assets in the country.