Govt plans independent entity under NIIF to act as investment manager for InvITs, REITs

P Manoj Mumbai | Updated on March 14, 2021

Govt sets asset monetisation targets for eight ministries

The government is weighing a plan to mandate the National Investment and Infrastructure Fund (NIIF) with the task of setting up an independent entity to act as investment manager for all infrastructure investment trusts and real estate investment trusts, floated by ministries and Central public sector enterprises, as part of a programme to raise ₹2.5-lakh crore through monetisation of assets.

“Considering the key role played by investment manager in the InvITs/REITs governance structure, the NITI Aayog has suggested that the practice of nominating one of the subsidiary companies of the CPSEs undertaking asset monetisation as investment manager should be avoided,” said a government official.

“The endeavor should be to appoint an independent professional agency, as this would boost investor confidence to a great extent,” said the official.

Investment manager

NIIF – India’s sovereign wealth fund – may be considered to set up an independent entity to act as investment manager for the InvITs/REITs of ministries and CPSEs, he added.

The plan was discussed at a meeting of the core group of secretaries for asset monetisation in February.

The investment manager is responsible for undertaking investment decisions on behalf of the InvIT/REIT, managing the assets and undertaking activities related to their general functioning.

The NITI Aayog has also suggested that new proposals for asset recycling/monetisation, particularly those with innovative structuring such as InvITs/REITs/securitisation, should be first discussed by the Public Private Partnership Appraisal Committee (PPPAC) to bring process efficiencies and fast track approvals, he added.

The Ministry of Railways tops the asset monetisation target from a list of eight ministries with ₹90,130 crore, followed by the Department of Telecom with ₹40,000 crore, Ministry of Road Transport and Highways with ₹30,000 crore, and Ministry of Power with ₹27,000 crore.

The Ministry of Civil Aviation and Ministry of Youth Affairs and Sports have been set a target of ₹20,000 crore each, while the Ministry of Petroleum and Natural Gas has been set a target of ₹17,000 crore.

The Ministry of Ports, Shipping and Waterways has a target of ₹4,000 crore.

The target for the Department of Food and Public Distribution, Ministry of Coal, Mines, and others are yet to be decided.

Assets lined up

The assets that are lined up for monetisation include toll roads run by the National Highways Authority of India; transmission assets of Power Grid Corporation; oil and gas pipelines of GAIL, Indian Oil Corporation and Hindustan Petroleum Corporation; airports run by Airports Authority of India in Tier 2 and 3 cities; dedicated freight corridor assets after commissioning; other railway assets; warehousing assets of Central Warehousing Corporation and NAFED; sports stadiums; cargo berths and other ancillary services run by major ports.

The NHAI and Power Grid Corporation have already sponsored one InvIT each, seeking to attract international and domestic institutional investors. Five operational roads with an estimated enterprise value of ₹5,000 crore are being transferred to the NHAI InvIT while transmission assets worth ₹7,000 crore will be transferred to the Power Grid InvIT.

Published on March 14, 2021

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