NHIT plans to raise Rs 4,500 crore debt to buy two more road projects

National Highways Infra Trust (NHIT) is planning to raise an additional debt of Rs 4,500 crore to fund the acquisition of two more operational road projects from its parent company, the National Highways Authority of India (NHAI).

The acquisition of road assets is set to be concluded in the fourth quarter ending March 31 (Q4FY24).

NHIT, an infrastructure investment trust (InvIT), has proposed to acquire a portfolio of seven operational road projects from NHAI against an earlier envisaged five as part of its third round of asset acquisition.

The acquisitions are proposed to be funded through long-term debt of Rs 9,000 crore (earlier envisaged at Rs 4,500 crore).

It will also raise equity by issuing units of an infrastructure investment trust (InvIT).

India Ratings has assigned “AAA” ratings for rupee term loans.

The rating reflects the right mix of operational assets with long-term revenue visibility, low operational risk, and backing from a strong and experienced parent.

The estimated enterprise value of the seven assets is likely to be approximately Rs 16,000 crore (as against the Rs 9,000 crore for five assets), subject to the valuation report.

At present, the InvIT, through its 100 per cent subsidiary, National Highways Infra Projects Private Ltd (NHIPPL) houses eight road assets with an aggregate length of 2,544 lane km.

The proposed addition of seven toll road projects will be through another wholly owned project NHIT Eastern Projects Private Ltd (NEPPL), the rating agency said.

The existing portfolio of eight project assets is located across Rajasthan, Gujarat, Madhya Pradesh, Uttar Pradesh, Maharashtra, Telangana, and Karnataka.

The diversification will improve to nine states after the addition of the proposed seven road projects.

These two subsidiaries are Special Purpose Vehicles (SPVs) with 100 per cent cash flow fungibility between the SPVs. 

The funds raised at the InvIT level are injected in two SPVs -- NHIIPL and NEPPL --- in the form of debt.

The cash flows from the SPVs will flow to the InvIT in the form of dividends, interest, and help in repayment of the InvIT’s debt.

The cash flow of two subsidiaries -- NHIIPL and NEPPL -- which hold all 15 road assets, would be available for servicing the debt at NHIT, the rating agency said.