AIIB Makes First Equity Investment in Infrastructure Investment Trust

India’s roads and highways will benefit from new financing sources thanks to the Asian Infrastructure Investment Bank’s (AIIB) first direct equity investment in India’s national highways. AIIB has approved up to USD50 million of equity in Oriental InfraTrust. The private capital mobilized will be invested in both greenfield infrastructure development and operational roads and highways assets.

Oriental InfraTrust is an infrastructure investment trust (InvIT) formed by a major Indian roads and highways company, Oriental Structural Engineering (OSE) and its wholly owned subsidiary, Oriental Tollways. The new InvIT investment vehicle was established to mobilize long-term private institutional capital for financing roads and highways in India.

India needs investments of USD4.5 trillion by 2040 to meet critical infrastructure gaps, according to a report from the Global Infrastructure Hub. Of this amount, India’s roads and highways sector requires an estimated USD580 billion.

“AIIB’s participation is a clear indication of our commitment to mobilize private capital into infrastructure financing,” said AIIB Vice President and Chief Investment Officer D.J. Pandian. “We expect this to increase confidence in long-term investors such as multilateral and bilateral development financial institutions, sovereign wealth funds, pension funds and insurance companies.”

Oriental InfraTrust has acquired a portfolio of five operating road assets from the sponsors —OSE and Oriental Tollways — and will now be responsible for the operation and maintenance until the end of the concession period. The road assets were initially awarded to the sponsors by the National Highways Authority of India under a design-build-finance-operate-transfer (DBFOT) model.

“This is a first for AIIB and demonstrates our ability as a new multilateral development bank to support and promote debt and equity capital markets by recycling and securitizing operating assets for additional capital needed to promote and accelerate India’s infrastructure development,” said AIIB Director General Dong Ik Lee.

Co-investors in the InvIT include the German investment company DEG, the International Finance Corporation and India-based HEG Ltd., among others.

About AIIB

The Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank with a mission to improve social and economic outcomes in Asia. Headquartered in Beijing, we began operations in January 2016 and have now grown to 97 approved members worldwide. By investing in sustainable infrastructure and other productive sectors in Asia and beyond, we will better connect people, services and markets that over time will impact the lives of billions and build a better future.