Monetising road assets through InvIT route revives in FY22

Monetisation of road assets through infrastructure investment trust (InvIT) has revived in FY22 after a lull in the previous year due to the pandemic. Road construction companies and National Highway Authority of India (NHAI) raised Rs15,100 crore by monetising road assets as of November 4, 2021 according to the data from rating agency ICRA. This was higher than Rs 11,500 crore raised in FY20. In FY21, largely due to the pandemic, strategic investors such as pension funds, private equity investors and sovereign wealth funds had stayed away from investing in roads assets.

“Road projects are one of the few infrastructure asset classes which have bounced back strongly in a very short time. Pension funds and other sovereign wealth funds are keen to participate in road InvITs,” said Rajeshwar Burla, group head, corporate ratings, ICRA.

Road InvITs provide 9-12% returns in the long term. Analysts estimate that on average InvITs have been able to reduce debt of their road projects before forming InvITs by 25-30%. In the next year, a few more road InvITs will be launched which will raise close to Rs34,500 crore according to ICRA. The first road InvIT was launched in FY18.