National Highway Authority of India (NHAI) is expecting to launch its first Infrastructure Investment Trust (InvIT) in December this year. The government is thus finalising a list of functional national highway project to be placed in this Infrastructure Investment Trust to offer it to potential investors.

According to reports, the government prefer brown-field projects for InvIT as they are less risky than greenfield contracts.

An official aware of the matter told Business Standard, “The projects that are being considered for the InvIT structure comprise nearly 80% brownfield (or existing projects) and around 20% greenfield (or new) projects.”

Further, he adds, that completely new projects are at a higher risk due to long term traffic projections.

The InvIT trust offered to the bidders will comprise of three to four projects that will form a special purpose vehicle (SPV), which will be traded on the domestic stock exchange and the returns will be directly linked to the performance of InvIT.

It will enable the individual or institutional investors to make small portion of income as return through direct investment.

“Brownfield assets with proven toll receipts will give the investor a certain level of confidence on the returns they can expect the portfolio to generate. It also helps the authority in revenue maximisation,” said Jagannarayan Padmanabhan, Director, CRISIL Infrastructure Advisory.

Source: Business Standard