Sebi nod sought to auction roads to InvITs

Sebi nod sought to auction roads to InvITs

Market


NEW DELHI : The ministry of road transport and highways has sought fresh approval from market regulator Sebi to operationalize a new plan for the monetization of assets under it. The ministry wants all future operational road projects to be offered under the bidding route to infrastructure investment trusts (InvITs) to ascertain proper valuations and get better returns.

Top officials in MoRTH said regulatory clarity is required to auction operational road projects to InvITs as investor interest is involved. “We were in dialogue with Sebi earlier as well on the issue as auction of road projects to InvITs has to be started at the earliest. We have given further inputs to the market regulator and hope to get its nod to our plan soon,” the official quoted earlier said.

InvITs are collective investment vehicles similar to a mutual fund that enable direct monetary investment from individual and institutional investors in infrastructure projects, which offer a small portion of the income as return.

A query send to MoRTH seeking details of the plan remained unanswered till press time.

MoRTH proposes to offer about 2,000-2,500 crore worth of NHAI’s operational highways under bidding route exclusively to InvITs in the next quarter. But further progress will depend how soon Sebi gives the nod, the official said.

Under the auction, all infrastructure trusts could ascribe their valuation for NHAI’s assets, including its own subsidiary, NHAI InvIT. A project will be awarded to the best quote rather than NHAI InvIT getting the road projects on nomination at a mutually agreed price.

“This will test how NHAI’s road assets are valued by InvITs promoted by various infrastructure firms. Several of NHAI’s operational assets have good traffic volume providing good returns as is evident from bids for toll-operate-transfer, operation and maintenance and toll securitization contracts,” the official said.

NHAI launched its InvIT in October, with the aim of mopping up 5,100 crore, as part of the government’s long-term plans to monetize road assets.

The InvIT took control of five toll road assets of 390km, spread across Rajasthan, Gujarat, Telangana and Karnataka. The road assets brought under the InvIT had an enterprise value of 8,000 crore. NHAI has raised about 7,000-8,000 crore through the InvIT route.

Earlier this month, NHAI also offered additional three roads aggregating 247km to its InvIT. The authority is looking at monetizing highway stretches with a combined length of 1,750km in 2022-23, to raise around 20,000 crore. Bidding by all InvITs will help the agency to get even better valuations for its projects.

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