BackNHAI infra trust to launch ₹1500-cr NCD, aims 1500 km of assets by 2025
The National Highways Infra Trust, which is launching a ₹1,500-crore NCD issue next week, will have 1,500 km of operational road assets, nearly 1.5 times more than what it has now, over the next three years
PremiumOver the next three years, the National Highways Infra Trust will have 1,500 km of operational road assets, nearly 1.5 times more than it does now, according to an official. The trust is launching a ₹1,500 crore Non-Convertible Debenture (NCD) issue next week.
The trust currently manages 636 km of operational national highways across eight sections, and over the next three years, it will manage 1,500 km.
The National Highways Authority will contribute the most (27% of the total share) to the Centre's ₹6-lakh-crore national asset monetization plan, which includes these Invit allocations.
In the first tranche of asset monetization, the NHAI, which is the sponsor of the InvIT in November last allocated five operational roads to the trust, running into 389 km -- Abu Road-Swaroopganj section; Chittorgarh–Kota and Chittorgarh Bypass section; Kothakota Bypass–Kurnool section; Maharashtra/ Karnataka border (Kagal)–Belgaum section; and Palanpur/Khemana-Abu Road section.
For these, the trust has paid ₹7,500 crore to the NHAI in concession fees for a 30-year tenor.
In the second tranche, in June the trust was given three more assets running into 247 km-- the Agra Bypass; Borkhedi-Kelapur-Telangana state border; and Shivpuri-Jhansi section, for 20 years at a concession fee of ₹2,850 crore.
In announcing the NCD issue, which begins on 17 October and ends on 7 November, National Highways Infra Investment Managers CEO Suresh Goyal stated, "Over the next three years, we will have over 860 km of highways with us."
The trust is providing a 24-year tenor debt that will be listed on the bourses with an annualised yield of 8.05% and a half-yearly yield of 7.90%.
Goyal said the trust will use the proceeds to repay the ₹15,000 crore bridge loan it has taken from the Bank of Maharashtra to pay the concession fee to the NHAI. The trust also has an undrawn credit line of ₹850 crore from the Bank of Maharashtra.
Only about 2% of the 63 lakh km of roads in the nation, or 1.364 lakh km, are operated by the National Highways Authority. However, according to Nitin Gadkari, the Union Minister for Roads and Highways, these national highways transport up to 86% of all passengers and 68% of all goods.
According to Mathew George, chief financial officer of National Highways Infra Investment Managers, the issue has a base size of ₹750 crore and an option to retain over subscription up to ₹750 crore. He also noted that this is the only investable asset with an assured return that is protected from inflationary pressure.
Goyal also claimed that the National Highways Infra Trust had already raised ₹8,000 crore from its initial InvIT sale, with notable investors including the Canadian Pension Plan Investment Board and the Ontario Teachers Pension Fund of Canada each purchasing the maximum permitted amount of 25%.
Non-convertible debentures
Non-convertible debentures (NCDs) are fixed-income securities typically issued as a public offering by highly rated companies to build up long-term capital gains. Compared to convertible debentures, they offer somewhat higher interest rates.
NCDs fall under the category of debt. They cannot be changed into stocks or equity. NCDs have a set maturity date, and depending on the fixed tenure specified, the interest can be paid either monthly, quarterly, or annually along with the principal.
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