National Highways Authority of India To Launch InvIT Through Public Placement

The Indian IPO market is maturing fast, and various IPO offers are making their way to the market. After the Powergrid InvIT IPO announcement, another state-owned unit is ready to float InvIT in the Indian market. National Highways Authority of India (NHAI) has filed to float an InvIT that will invest in infrastructure projects.

NHAI plans to mop around Rs 5,100 crores from the market containing primary components. In addition, a portion of an offer for sale shares will also find ways to the market, although the amount is not disclosed yet.

Through the InvIT, NHAI is looking to monetise resources by unlocking operational road assets, creating a steady income source for investors.

Earlier in January, another PSU unit, Power Grid Corporation of India, also filed for an InvIT. It filed for a Rs 7735 crores IPO comprising primary and secondary components. While Power Grip decided to go the IPO way, NHAI InvIT will be placed through a private placement route.

InvIT is an investment scheme of quasi debt fund nature. It functions more like a mutual fund, where the trust invests the collective funds into infrastructure development projects. The investment creates a small income for the investors. In characteristics, it is close to REIT trusts which allow investors to invest in real estate projects.

SEBI in 2014 approved InvIT and REIT IPOs in the Indian market, but there are only a few such IPOs have hit the market. The first was IRB Infrastructure Developer Ltd, which introduced InvIT in 2017. NHAI will only be the fourth to float an InvIT offer.

NHAI has appointed investment bankers and advisors to carry out the InvIT process. Once it receives the nod from the market regulator, NHAI InvIT will hit the market in the current calendar year.

Powergrid and NHAI InvIT are part of the union government’s plan to fulfil a divestment goal of Rs 1.75 lakh crore in FY 21-22.

InvIT allows investors to invest in an annuity-like, risk-free investment tool that will generate steady income for 10-12 years. In 2019, the government had given nod to NHAI to create the trust to initiate a process to monetise completed national highway projects and projects with a toll collection record of at least a year for which it has the authority to levy toll on the identified highways.

While the market is awaiting more details on the InvIT, you can prepare to invest in upcoming IPO offers by researching the market and opening the first Demat with Angel One.