Vertis Infrastructure Trust, an infrastructure investment trust (InvIT) backed by global investment firm KKR and Ontario Teachers’ Pension Plan, plans to double its assets under management (AUM) to about ₹52,000 crore over the next two years, driven by steady secondary acquisitions of operational highway projects worth ₹5,000–6,000 crore annually, joint chief executive officer Zafar Khan said in an interview.
The roads-focused InvIT, which currently manages assets worth around ₹26,000 crore, expects to add a mix of hybrid annuity model (HAM) and toll projects to maintain a balanced portfolio and enhance investor returns.
“We are not satisfied with ₹26,000–27,000 crore. We are looking at doubling our AUM in the next two years. For that, we will continue to add ₹5,000–6,000 crore of assets every year,” Khan said.
Secondary market key to growth
Unlike some peers that rely heavily on toll-operate-transfer (TOT) bundles from the National Highways Authority of India (NHAI), Vertis has built much of its portfolio through secondary acquisitions from developers.
“We have only one ToT asset. Most of our growth has come from the secondary market, and that pipeline is still active,” Khan said.
The InvIT is in advanced stages of completing the acquisition of HAM projects from PNC Infratech. Of the 10 projects in the transaction, nine have already been taken over, while the tenth is expected to be completed later this month after achieving commercial operations date (COD).
“With this, 100% takeover of the PNC portfolio will be complete,” he said.
Vertis is also among the bidders for another secondary HAM portfolio currently on the block, and expects final bids to be submitted soon. In addition, it plans to target at least one or two TOT bundles if pricing and project specifics are attractive.
Overall, Khan said the InvIT aims to add assets worth ₹5,000–10,000 crore over the next couple of years, though it is conservatively budgeting ₹5,000–6,000 crore annually.
Traffic growth boosts returns
The expansion push comes amid robust traffic growth across national highway corridors. According to Khan, average traffic growth across operational corridors has exceeded 5% over the past year, aided by economic activity and network expansion.
On newer access-controlled corridors, traffic growth has been even stronger, at 10–15%.
“Across our portfolio, traffic and revenue have been higher than our projections. That gives comfort to investors,” he said.
Vertis expects around 5% annual traffic growth in its mature operational assets and 10–15% growth in newer projects, which could translate into higher-than-anticipated cash flows and distributions.
The InvIT has so far met or exceeded its revenue projections, Khan said, adding that actual collections have consistently outperformed estimates. “There has never been a gap between projected and actual revenue. In fact, actual revenue has been higher,” he noted.
The trust has also received full annuity payments from NHAI on its HAM assets, including compensation related to earlier issues such as axle-load changes, reinforcing cash flow visibility.
Balanced HAM-toll mix
Vertis is consciously maintaining a balanced portfolio between HAM and toll projects. While HAM assets provide predictable, annuity-based cash flows from NHAI, toll roads offer upside from traffic growth.
“Our objective is to have a fine balance—stable cash flows from HAM and growth from toll. We don’t want to be heavily skewed to one side,” Khan said.
Even as NHAI continues to monetize assets through multiple channels—including its own InvIT and other platforms—Khan believes there is enough headroom in the sector.
With separate pipelines for TOT, InvIT and other monetization routes, he expects at least one TOT bundle to be offered each quarter, though volumes may be lower than in peak years.
Open to BOT projects
Vertis is also evaluating participation in future build-operate-transfer (BOT) projects, especially as the government tweaks concession agreements to allow fund houses to bid directly, often in partnership with EPC contractors.
“BOT is not our primary market right now, but we are not averse to it. If the right project and risk profile come, we may look at bidding,” Khan said.
However, he cautioned that construction risk must remain limited. “From an InvIT perspective, we can take a certain level of construction exposure, but not beyond that.”
IPO on the horizon
An initial public offering is under active consideration, though no timeline has been finalized.
“At ₹26,000–27,000 crore AUM, we are at a substantial level to go public. Traffic growth is strong, and the PNC assets are stabilizing. The triggers required for an IPO are largely in place,” Khan said.
He added that investor appetite remains healthy. The InvIT’s units, issued earlier at ₹98, are currently trading above ₹107, reflecting positive market sentiment.
“There is no issue from the investor side. It is a matter of timing and a few internal decisions. It is on the cards,” he said.
- Vertis aims to double its AUM from ₹26,000 crore to ₹52,000 crore by 2028.
- Growth is driven by buying developer assets rather than just NHAI TOT bundles.
- Revenue is exceeding projections, with 10–15% growth on new corridors.
- Internal triggers for a public listing are met; timing remains the only variable.
- The trust maintains a 50/50 mindset between stable HAM annuities and high-upside toll revenue.
ESG and operational focus
Beyond scale, Vertis is also sharpening its environmental, social and governance (ESG) framework. The InvIT recently raised sustainability-linked financing, aligned with International Finance Corporation standards, and is expanding its solar capacity across toll plazas and project sites.
It expects to cross 1 megawatt of cumulative solar capacity this year and is piloting AI-based systems to optimize energy consumption in road lighting, targeting 8–15% savings.
Khan said these initiatives are not merely compliance-driven. “ESG has to be paramount for infrastructure. It cannot be ignored if you want sustainable growth.”
With steady traffic growth, a visible acquisition pipeline, and a potential IPO ahead, Vertis is positioning itself to be among the top three road InvITs in India by scale over the next few years, Khan said.
“Our objective is not just growth in AUM, but to consistently outperform our projections and exceed investor expectations,” he added.