Infrastructure Investment Trusts (InvITs)

The National Highways Authority of India (NHAI) has received SEBI’s in-principle approval for registration of Raajmarg Infra Investment Trust as an Infrastructure Investment Trust (InvIT).
This move enables institutional and retail investors to participate in NHAI’s road infrastructure projects.

What are InvITs?

Infrastructure Investment Trusts (InvITs) are collective investment schemes akin to mutual funds, which allow investors to directly invest in revenue-generating infrastructure projects, such as:
Toll roads
Highways
Power transmission lines
Pipelines

Structure of InvITs

1Sponsor: Infrastructure companies or private equity firms that own or develop infrastructure assets.

2Trust Formation: Sponsors transfer ownership of assets to the InvIT Trust.

3Unit Issuance: The Trust issues units to investors, who earn a share of revenue generated from these assets.

Regulatory Framework

Governed by SEBI (Infrastructure Investment Trusts) Regulations, 2014.
Key provisions include:
Mandatory distribution of at least 90% of net distributable income to investors.
Disclosure and reporting requirements to ensure transparency.
Allows both listed and unlisted InvITs.

Significance

Mobilises long-term capital for infrastructure development.
Provides stable, predictable returns for investors, similar to dividend-paying assets.
Encourages private sector participation and reduces the fiscal burden on the government.
Improves liquidity in infrastructure financing and deepens the capital markets ecosystem.

Infrastructure Investment Trusts (invits)