The Indian National Highways Authority of India (NHAI) board has approved infrastructure developer Larsen & Toubro's plans to set up a business trust in Singapore and list 6 toll road projects on the Singapore stock exchange that could raise up to US$1 billion, according to sources.

L&T Infra Development Projects Limited (IDPL) will set the business trust and the parent company can offload its equity in the projects to the trust. According to local sources, the trust will then issue debt instruments in the form of debentures to the SPV undertaking these highway projects.

The projects are Palanpur-Swaroopganj 76 kilometer (km), Gujarat-Rajasthan, Vadodara-Bharuch (83.3 km, Gujarat), Jadcherla-Kathakota (56 km, AP); Panipat Elevated Highway (10 km, Haryana); Krishnagiri-Thopur (86 km, Tamil Nadu), Krishnagiri-Walajahpet (148 km, Tamil Nadu). The last project is under implementation and the other five are finished projects.

The NHAI board's approval is subject to certain checks and balances which it has said the company must follow including that the firm must get a legal opinion on the matter and the interest rate at which the trust lends to the SPV must not be more than the interest rate it pays to its current lenders. In addition, the foreign exchange risk must be borne by the trust, it has specified.An official familiar with the matter said:

"Road projects are public assets and in any case of equity transfer of more than 15%, it has to be nod by NHAI. Also, refinancing or changes in debt structure have also to be nod by us."

L&T IDPL has a total of 18 road projects under its arm.The rationale behind listing the project abroad is that foreign investors have lower return expectations than Indian investors.  The move could help Indian firms lower their capital cost.