Canada Pension Plan Investment Board (CPPIB) and Ontario Teachers’ Pension Plan (OTPP) have invested a total of Rs 4,160 crore (around $485 million) in a follow-on investment round into an infrastructure investment trust (InvIT) sponsored by the National Highways Authority of India (NHAI).
This investment is part of a Rs 8,340 crore equity fundraising round by the National Highways Infrastructure Trust (NHIT). While CPPIB and OTPP invested Rs 2,080 crore each, several Indian pension funds and insurance companies also took part in the issue.
The Employee Pension Fund Organization invested Rs 2,035 crore, marking its first investment in an InvIT. Other investors included the pension funds of Larsen & Toubro, Indian Oil Corporation and a Rajasthan government’s electricity utility, as well as Axis Max Life Insurance, Axis Bank, IndusInd Bank, and mutual funds like Nippon India, Baroda BNP Paribas, Nuvama and White Oak Capital. NHAI, as the sponsor, invested 15% in this round.
CPPIB and OTPP invested in NHIT for the fourth time, including last year when they poured Rs 1,820 crore each. With the latest round, the two pension funds have together invested Rs 11,520 crore into NHIT. Both pension funds have made equal investments into the InvIT in this round, and their effective shareholding remains unchanged at 25% each.
“Our continued investment in NHIT reflects our long-term commitment to India’s infrastructure growth story,” said Deb Hajara, managing director of infrastructure and natural resources for Asia Pacific at OTPP.
The latest funding round comes weeks after NHIT appointed Rakshit Jain, the former head of the Indian operations at Italian infrastructure group Mundys (earlier known as Atlantia) as its chief executive officer.
CPPIB and OTPP said in separate statements that the new money will mainly be used to acquire 11 additional road concessions across north, central, and south India and to pay a concession fee to NHAI to be utilized for further development of road infrastructure in India.
The InvIT is acquiring these road assets for Rs 17,738 crore, for which it has also separated raised Rs 10,040 crore in debt, according to a press release by the Ministry of Road Transport and Highways.
The acquisition will expand NHIT’s portfolio from 15 to 26 operating toll roads, all of which have been acquired from NHAI. Following this, NHIT will own, operate, and maintain toll roads in Gujarat, Rajasthan, Telangana, Karnataka, Uttar Pradesh, Madhya Pradesh, Maharashtra, Assam, West Bengal, Andhra Pradesh, Uttarakhand, and Chhattisgarh, spanning a total length of over 2,300 kms with concession periods ranging between 20 to 30 years.
The InvIT was set up by NHAI in 2021 to monetise its assets and raise more money to build more highways. Both Canadian pension funds had acquired a 25% stake each for just over Rs 6000 crore and had come on board the InvIT as anchor investors.
The NHAI initially transferred five highway projects to the InvIT. These road projects had a combined length of 389 km and an enterprise value north of Rs 8,000 crore. The InvIT bought three roads in the second tranche. These were valued around Rs 3,800 crore and spanned a route length of around 247 km.
As part of its third funding round, NHIT had raised around Rs 7,312 crore in equity capital from the two pension funds and a few domestic investors, as well as Rs 9,000 crore in debt from Indian lenders.
