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In an attempt to bring public money into infrastructure development, the ministry of road transport and highways is planning to launch around 10 road and highway InvITs that will raise money from small investors, with returns backed by sovereign guarantees.

Minister of road transport and highways Nitin Gadkari told Mint that about 10 public InvITs with different categories and geographies of road projects would be launched in phases with the first such project expected in next one month that will raise money from the public and make them part of India’s successful highway development programme of the country.

“The plan is to raise money for highway development from the public to widen the investment basket in road InvITs that largely gets money from long term institutional investors, insurance and pension funds and private equity firms. The public can get assured returns on such investments, helping them to benefit from country’s infrastructure development programme," Gadkari told Mint on the sidelines of the Mint Mobility Conclave.

Public InvIT has so far eluded the road sector and the new initiative is expected to further deepen the asset monetisation market in the highway sector. So far, all road sector InvITs have been private trusts. To get retail investors on board in such trusts and launch assured income plans would need a nod from the market regulator Sebi.

According to MoRTH officials, the proposal is pending with the Securities and Exchange Board of India and once the regulator’s clearance is secured, which may happen soon, the plan for multiple public InvITs will be launched.

The initial plan is to bring retail and small investors in completed roads. This would be done with government- sponsored InvITs offering retail investors assured returns of 8% on a minimum investment of 1 lakh. Such, returns would be backed by sovereign guarantee, providing utmost security to small investors.

It’s worth mentioning that the National Highway Authority of India has a project bank of 20,000 km of completed roads and there are roads where traffic movement has stabilised over a period of time. NHAI itself is offering these roads in bundles and will be offering projects worth 40,000 crore in the next two financial years.

The government has also sought approval from SEBI to operationalise a new plan for monetisation of assets under which all future operational road projects would be offered only under the bidding route to InvITs to get proper valuations and better returns.

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