Road asset monetization presents big opportunity: FIRST Construction Council

The FIRST Construction Council (FCC) - an infrastructure think-tank - hosted a virtual discussion forum on July 11, 2023, to highlight challenges and opportunities in road asset monetization. Two domain experts enlightened participants - comprising FCC members and key decision makers from the construction & infrastructure industry - about the latest developments in the area of road asset monetization. In his opening remarks, Pratap Padode, President and Founder, FIRST Construction Council, said, “FIRST Construction Council provides an ideal platform to all stakeholders associated with the construction sector to come together and discuss thought provoking concepts. Today's topic of discussion is "Road Asset Monetization". Financing has been one of the Achilles heels in the infrastructure story which has punctured our growth many times. As infrastructure projects have long gestation period, financing is very critical. NHAI has also suffered because of the high debt of Rs 3.43 trillion on its balance sheet. Hence, the government launched the National Asset Monetization plan to raise Rs 6 trillion by FY25 and 27 per cent of this has to come from roads. There is a huge monetization benefit that can accrue to NHAI and private developers, who have taken on the risk of developing roads.” He also announced the plan of FIRST Construction Council to establish academic institute to meet the talent requirement of the infrastructure sector, which is only going to grow faster with India aiming to become a $ 5 trillion economy. This was followed by presentations of Vikas Sharma, Partner, Infrastructure Investment Banking Advisory Team, EY, and Vijay Agrawal, Director, Equirus Capital Pvt Ltd. Speaking about the role of private sector investment in infrastructure, Vikas Sharma, said, “HAM (Hybrid Annuity Mode) requires equity investment by private sector. Based on projects awarded till December 2022, expected HAM equity investment outlay from the private sector for HAM projects is Rs 49,000-61,000 crore (approximately $6-7 billion). Such massive outlay by private sector and continued growth in HAM project award would require release of existing equity locked in developed projects through stake monetization; thus there is a scope of significant M&A (merger & acquisition) activity in near future. We expect M&A to be very important part of strategy for developers.” Stating that Infrastructure Investment Trusts (InvITs) are gaining traction, Vijay Agrawal said, “Though Sensex has witnessed high volatility over the last 15 months, yield from InvIT has shown continued uptick and resilience during volatility. In the road sector, AUM (assets under management) crossed more than Rs 1 trillion and InvITs have emerged as preferred holding structure.” To Read the Complete Report, CLICK HERE About FIRST Construction Council: FIRST Construction Council provides a platform to promote the adoption of best practices, and be the torchbearer for all policy initiatives that are needed to enhance the importance and welfare of the construction industry. By engaging with key stake-holders of the industry and government agencies, the council provides a networking platform and access to growth opportunities for its members. If you want to be a part of the Networking and Knowledge activities of FIRST Construction Council, drop us an email at Contact@FIRSTConstructionCouncil.com