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Highways Infra Trust eyes Rs 25K crore AUM this FY: Gaurav Chandna

The company's growth is fueled by the infusion of Rs 5,500 crore from its key investors- KKR Fund and Ontario Teachers' Pension Plan (OTPP)

Gaurav Chandna

Gaurav Chandna, executive director and joint chief executive officer (joint CEO), Highways Infrastructure Trust

Prachi Pisal Mumbai

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Highways Infrastructure Trust's (HIT's) growth is set to be fuelled by the infusion of Rs 5,500 crore from its key investors — KKR Fund and Ontario Teachers' Pension Plan (OTPP), said Gaurav Chandna, executive director and joint chief executive officer (joint CEO). Chandna, in an interaction with Prachi Pisal in Mumbai, outlines the InvIT's expansion plans, traffic projections and the outlook for 2025.
 
Take us through your portfolio expansion plans?
 
Our current 15 AUMs are worth over Rs 10,000 crore. We won toll, operate, transfer (TOT) concessions in September 2024, and those assets are worth Rs 6,661 crore. We should be closing the deal by the end of January 2025. It will take our AUM close to Rs 17,000 crore. Additionally, there is another impending closure with PNC Infratech. By March-end, we should have closure of the PNC portfolio. After completion of PNC acquisition, the AUM would be around Rs 25,000-26,000 crore.
 
 
What kind of assets are you looking for?
 
National Highways Authority of India (NHAI) is the biggest seller for us. We are looking at a mix of toll and annuity assets because HAM assets provide a certain protection in terms of cash flows, and there is an element of both upside and downside risk on toll assets. But we would ideally want to keep toll assets at a slightly higher proportion, 60-65 per cent of our total portfolio, with the rest being annuity. For geographical diversification, we are keen to have an asset in Uttar Pradesh and other states in the North where we currently do not have toll assets. It has a decent traffic growth potential.
 
Are you planning any fundraising?
 
Considering our investment plans, there is a preferential issue going on right now. We are raising around Rs 5,500 crore of cash from our investors, KKR and OTPP.
 
What is your outlook on traffic growth?
 
Not only are new road corridors coming up, but alternative modes of transport are also likely to have impacts. On a long-term basis, we expect to have a 4-5 per cent traffic growth rate in general for the India level. But wherever there are diversions, it can also go down by 100-150 basis points (bps).
 
What do you have to say about the InvIT’s long-term financial goals?
 
Though we are in the business of deploying funds, we do not have any specific annual targets. Any deal is a function of the merits of that particular transaction. If a transaction doesn't make sense, we are happy to sit out for 6-12 months. Fortunately, that situation hasn't arisen so far. But, I am sure there will be a phase in the interim.
 
There is a significant operating leverage on account of growth. The larger the portfolio, the better the economics can be offered to the investors.
 
Considering all these investment plans, what are the factors that you are banking on?
 
The government’s focus on infrastructure would be there given that consumption-led growth is much more uncertain now. Concerns about consumer loan delinquencies may put pressure on demand and consumer-led growth. Clearly, government-led capex will continue to be a focus area, but that’s not the only criterion because the government has also been driving infra-focused growth over the last two terms. There are constraints with respect to how much a market can absorb and how much the government can fund. But despite that, I think there should be healthy growth.
 
Will we see more supply (of road assets for sale) in the market in the coming months?
 
Supply is likely to be stable. I don't think we will see any spike or downward trend over the next 12-18 months at least. Beyond that, it's difficult to predict. Currently, it's balanced because there is something for everyone. For TOTs, there are potentially 7-8 players in the market who can write decent, big cheque sizes. But, it's only 4-5 players who are participating in any of the bids. The moment we see 8-9 players participating, then probably yes, it could be a seller's market. Right now, I would say it's a fair market.
 
What is your overall outlook for the sector in 2025? 
 
We hope that at least in the organised sector, the bigger players get more concessions. The logical step is that they should also tighten the bidding processes and make the qualification criteria more stringent. Bids should go a long way in terms of maintaining the quality of projects.

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First Published: Jan 16 2025 | 12:00 AM IST

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