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ICRA estimates a monetization potential of Rs. 53,000 – 60,000 crore from the sale of the 33 road assets through the toll-operate-transfer (TOT[1])/ Infrastructure Investment Trust (InvIT]) mode, which could translate into a Rs. 38,000-43,000 crore lending opportunity for banks/ capital markets.
In April 2024, the National Highways Authority of India (NHAI) had released an indicative list of 33 road assets it plans to monetize in FY2025 through a mix of TOT and sale to the NHAI’s InvIT. These assets are spread across 12 states, cumulatively spanning nearly 2,750 km and with annual toll collections of Rs. 4,931 crore.
Over the last six years, the NHAI has monetized 29 assets across 10 TOT bundles with valuation multiples ranging between 0.44 times to 0.93 times, realizing Rs. 42,334 crore so far. Considering a 20-year concession period and annual toll collections, the identified 33 assets may garner between Rs. 53,000 – 60,000 crore, as per ICRA’s assessment. Going by the debt-to-equity funding ratio seen in the past transactions, this could translate into a Rs. 38,000-43,000 crore lending opportunity for banks/ capital markets.
The NHAI intends to club the 33 identified assets into large (more than Rs. 6,000 crore), medium (about 3,000-4,000 crore) and smaller bundles (Rs. 1,000-3,000 crore), for different types of investors.
The composition of the bundles shall remain a determining factor for the valuation multiple as the presence of road stretches built under the annuity mode/ Hybrid Annuity Mode (HAM), will reduce the requirement for operation and maintenance expenses (for the new concessionaire) and hence, will carry a relatively higher multiple
