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NIIF to invest equity in road projects in India

Signed an MoU with the NHAI to form a SPV to execute fund arrangement for large sized road projects

NIIF, NHAI, Road projects, SPVs, Delhi-Mumbai Expressway, Bharatmala, MoRTH

National Investment and Infrastructure Fund (NIIF) has entered into an agreement with the national highways building authority to invest equity in road projects, a move that will help the government fill the gap in funding the sector.

NIIF signed an MoU with the NHAI to form an SPV to execute fund arrangement for large sized road projects, particularly green field, which will be executed by NHAI.

For some time now, NHAI has been exploring the idea of offering equity to investors in road projects.

NIIF is looking to invest equity of around Rs 15,000 crores in the Delhi-Mumbai expressway, and can further raise a debt of around Rs 60,000 crores on the equity. The MoU is likely to go to the cabinet for approval to work out the modalities on toll apportionment.

This comes as highways ministry looks for innovative modes of funding, at a time when India’s infrastructure targets are lofty but government spending is muted.

The SPV will allow NIIF to take sovereign funds on board and can co-invest in projects being built by NHAI. All construction risks, and the land acquisition cost will be borne by NHAI under the SPV.

NIIF will also explore projects offered on toll-operate-transfer basis by NHAI. “One of the first projects we reviewed was TOT-I, we will continue to bid for TOT. NIIF is quite keen on investing in the projects from NHAI,” said Sujoy Bose, MD, NIIF.

Under the TOT model, investors make a one-time lump sum payment in return for long-term toll collection rights.

This will be NIIF’s first investment in any road project, given this model receives nod from the cabinet, officials said.

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September 2019
10 Sep 2019