Venture Capital and Pension Funds Permitted to Participate in Highway PPP Projects

The Ministry of Road Transport and Highways (MoRTH) has revised the bidding framework governing highway projects developed under the Public-Private Partnership (PPP) model by permitting venture capital funds, private equity funds, infrastructure funds, pension funds, Alternative Investment Funds (AIFs) and Foreign Investment Funds (FIFs) to participate in Build-Operate-Transfer (BOT) (Toll) projects. This marks a departure from the earlier framework under which participation was largely limited to highway developers and construction companies.

In an effort to attract greater private investment into the road infrastructure sector, MoRTH has modified the bidding norms governing BOT (Toll) projects. The revised framework is intended to broaden the investor base and facilitate participation by long-term institutional capital in highway infrastructure development.

Under the revised bidding framework, an eligible bidder may include “a natural person, private entity, government-owned entity, Alternative Investment Fund (AIF), Foreign Investment Fund (FIF), or any combination of them with a formal intent to enter into a Joint Bidding Agreement to form a consortium.” Existing highway developers and construction companies continue to remain eligible to participate in the bidding process.

The amended framework further prescribes separate evaluation criteria for institutional investors and traditional highway developers. While construction companies will continue to be assessed on the basis of technical expertise and financial capacity, institutional investors will primarily be evaluated on their financial strength. Media reports indicate that such investors may be required to satisfy enhanced financial eligibility thresholds under the revised framework.

To address construction capability requirements, institutional investors participating in BOT projects will be required to identify concessionaires, engineering partners or contractors possessing the requisite technical qualifications prescribed under the bidding documents. Such contractors must satisfy the applicable eligibility criteria specified under the tender framework.

The revised framework is expected to broaden the investor base for highway infrastructure projects and encourage increased participation by long-term institutional capital, particularly infrastructure funds, pension funds and other financial investors seeking exposure to infrastructure assets. The move also aligns with the Government’s broader objective of enhancing private participation in infrastructure development and strengthening investment interest in PPP-based highway projects.