4 highway InvITs to list soon, BoT revival on the anvil: Nitin Gadkari

Union transport minister Nitin Gadkari has said the government will list four infrastructure investment trusts in the highways sector soon, with majority exposure to the retail investors offering an assured return of 7-8%. The retail contribution from the individual investors will be capped at ₹10 lakh. Gadkari also hinted at a revival of the BoT model of highway construction.

Addressing a FICCI event, Gadkari said, “I have decided that we will build roads with contribution from the common man of the country. There are various funding models for highway construction like BoT, hybrid annuity, EPC and toll operate and transfer (ToT). We have recently formulated the infrastructure investment trusts and will go to the capital market with the projects by the next month. We will take four projects for approval of SEBI.”

InvIT, which is similar to real estate investment trusts, rewards the unit holders with the cash flows from the project.

“This will help common citizens in the low and middle income category to invest in infrastructure projects assuring a return of 7% to 8%. This is very important as returns on bank FDs are coming down and it is a major issue for retirees,” Gadkari added.

Gadkari hinted at the revival of the build operate and transfer (BoT model) – the PPP model in which highway development is funded by the private sector. “We will also increase the BoT project portfolio. BoT was in ICU but the situation has improved. Cartelisation takes place in BoT when only four or five players participate, while good competition is seen when a larger number of players participate. So if 25–30 developers participate in the bidding process, we will go for it,” Gadkari said.