By Vikas Sharma & Jitesh Khatrani
NHAI’s Asset Monetisation Programme, implemented through the Toll-Operate-Transfer (TOT) and Infrastructure Investment Trust (InvIT) models, has successfully unlocked value of existing road assets. Both models are complementary, attract diverse pools of capital and should be persisted with by the NHAI, write Vikas Sharma & Jitesh Khatrani
How have the past rounds of TOT fared?
The National Highways Authority of India (NHAI) has successfully awarded 11 Toll-Operate-Transfer (TOT) bundles for around Rs 49,000 crore from FY17-18 till date. While bidding intensity varies for different packages depending on the size of the project bundle/project specific considerations, overall call for bids for TOT projects has seen good interest with four bids received for the last TOT bid in FY25 (TOT Bundle 16).
Factors behind the reduced momentum
Since the NHAI has been using the InvIT model for monetisation (total awarded value of `43,638 crore) from FY22 onwards, monetisation proceeds from TOT model have been lower in FY25 (Rs 6,661 crore) and FY26 till date (yet to be awarded) compared to FY23 (Rs 10,662 crore) and FY24 (Rs 15,968 crore). However, we see continued interest from global and domestic investors and anticipate multiple bidders in future TOT processes.
Are investors interested in the evolving InvIT-led approach?
The Indian Highway sector continues to receive significant interest from institutional, global and domestic investors. National Highways Infra Trust (NHIT), the InvIT set up by the NHAI, completed the fourth round of fund raising in March 2025 attracting demand from existing investors such as Canada Pension Plan Investment Board (CPPIB), Ontario Teachers’ Pension Plan Board (OTPP) and new investors such as the Employee Provident Fund Organisation (EPFO). We understand that several private listed InvITs are also evaluating converting to public listed InvITs to enable fund-raise from domestic retail investors.
Returns & risks of InvIT vs TOT
Projects under the InvIT model are toll projects with concession period of 20-30 years. Accordingly, underlying risk and return profile of projects is very similar to TOT projects. While the InvIT structure is more efficient for holding assets, there are examples of InvITs (acquisition by Highway Infrastructure Trust under TOT 16) directly acquiring projects under TOT model as well. InvITs allow investors access to pooled cashflows from multiple projects and hence reduce the risk profile compared to investors being exposed to a single project risk. The InvIT structure also has an additional advantage of allowing institutional investors like mutual funds and retail investors to participate in project ownership.
Will InvITs become the default model?
The InvIT/ Tot models are preferred by financial investors who are keen to invest in operating road projects with a history of toll / annuity collections and long balance concession life.
Developers, on the other hand, would continue to prefer projects awarded through the BOOT (Build Own Operate Transfer) or HAM (Hybrid Annuity Model) which allow developers to construct roads and monetise their investment, on achievement of commercial operations to financial investors.
While the InvIT and TOT models have been very successful in realising value from operational highway projects, we see these models co-existing with developers owning assets awarded under the BOOT/HAM models and held under a traditional corporate structure, which allows project owners to retain cashflows from existing projects to further scale up the platform unlike an InvIT where at least 90% of the cash flows are required to be distributed to investors.
To summarise, the existing models of asset development (BOOT and HAM) and asset monetisation (through TOT and InvIT models) should be persisted with to address the objectives of developers and financial investors, respectively, allowing the NHAI to access a diverse set of investor pool.
The writers are partners, Investment Banking-Infrastructure, EY India.
Disclaimer: Views expressed are personal and do not reflect the official position or policy of FinancialExpress.com. Reproducing this content without permission is prohibited.