Rise in Indian road sector M&A, NHAI to raise INR 54,000 in FY25

A senior official from the National Highways Authority of India (NHAI) recently announced that the organisation is targeting INR 54,000 crores from project-based funding as well as monetisation of the assets under its belt. The 2024 Financial Year accrued INR 38,334 crores from project based financing as well as the current monetisation program - which includes the Toll Operate Transfer (ToT) and Infrastructure Investment Trust (InVIT).
ToT is an initiative by the NHAI wherein the government allows private companies to operate a select bundle of highways for a certain period, granted by paying a lump sum amount to the government. Private companies get returns from the tolls, while the government also earns revenue. The InVIT programme allows for investments to be pooled together to operate infrastructure projects, allowing investors to earn returns through their shares in the project.
The NHAI is currently aiming to monetising 33 highways across India (total length of 2471 kms), including parts of the Northern, Northeastern, Eastern regions, as well as Tamil Nadu in the South. In the last fiscal year, these stretches accrued a total of INR 49,314 crores.
Asset monetization will continue to remain a strong financial decision for the government in FY25. Monetization from InVIT from the previous fiscal year generated INR 15,700 crores, and from ToT around INR15,986 crores. The National Monetization Pipeline (NMP) predicts that the road sector will account for 27% of the total monetization between 2022 and 2025. As of now, it has raised about INR 1.08 trillion out of the target INR 1.60 trillion.
The Indian road sector - both public and private - have grown significantly in the last three years, with initiatives such as InVIT and infrastructure focused funds contributing towards the growth. InVIT, in particular, makes up for 70% of road asset transactions in India and has drawn traction from global investors in Canada, Abu Dhabi, and the United States.
Infrastructure monetization is transforming India's road landscape and driving economic growth and modernising the current transport network. NHAI's prudential investment strategies have raised substantial capital for the government, while also improving operational efficiency and maintenance standards across its road base.

Next (NARCL offers to buy INR 988 crore debt for Essel Infraprojects' Ludhiana road project)

Rise in Indian road sector M&A, NHAI to raise INR 54,000 in FY25

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