This month, the government will seek to raise Rs 2,500 crore from the capital market for three road projects

According to a senior official on Monday, the government will approach the capital market this month to raise approximately Rs 2,500 crore to finance three road projects.

According to the government official, the funds will be raised through Infrastructure Investment Trusts (InvITs).

On the condition of anonymity, he told PTI, "We would approach the capital market this month to raise about Rs 2,500 crore for the three road projects."

Infrastructure Investment Trusts (InvITs) are financial vehicles that follow the model of mutual funds. They are created to pool investor capital and invest in assets that will generate cash flows over time.

The first infrastructure investment trust established by the National Highway Authority of India raised more than Rs 5,000 crore last year.

Road Transport and Highways Minister Nitin Gadkari had earlier stated that "NHAI InvIT attracted two international pension funds, Canadian Pension Plan Investment Board and Ontario Teachers' Pension Plan Board, who together with diversified DIIs invested units worth more than Rs 5,000 crore in InvIT portfolio, which has currently five National Highway."

More national highways will eventually be added to the InvIT portfolio, he continued, because the long-term revenue-generating assets, like toll roads, offer steady and long-term yields under the InvIT framework.

As a tool, InvIT gives investors more flexibility and is anticipated to draw patient capital (for, example, 20–30 years) to the Indian highway market because these investors are wary about construction risk and are eager in investing in assets that generate steady returns over the long term.

Since road assets worth Rs. 1.60 lakh crore would be monetized over four years until FY25 under the NMP plan announced by Finance Minister Nirmala Sitharaman in August of last year, NHAI has the highest stake under the National Monetization Pipeline (NMP).