NHAI to launch its maiden Infrastructure Investment Trust (InvIT)
- National Highways Authority of India (NHAI) will launch its maiden Infrastructure Investment Trust (InvIT) on 29 October.
- It aims to mop up Rs 5100 crore, as part of the government's long-term plans to monetise road assets.
- NHIT InvIT will hold the five toll road assets of 390 km, spread across Rajasthan, Gujarat, Telengana and Karnataka which have an estimated revenue of Rs500 crore in FY22.
About InvITs
- InvITs are collective investment vehicles similar to a mutual fund.
- It enables direct investment of money from individual and institutional investors in infrastructure projects to earn a small portion of the income as return.
- InvITs enable developers of infrastructure assets to monetise their assets by pooling multiple assets under a single entity (trust structure).
- In India, InvITs are governed by SEBI (Infrastructure Investment Trusts) (Amendment) Regulations, 2016.
Key features of InvITs
- The InvIT is designed as a tiered structure with a sponsor setting up the InvIT which in turn invests into the eligible infrastructure projects either directly or via special purpose vehicles (SPVs).
- The sponsor of the InvIT is responsible for setting up the InvIT and appointing the trustee.
Who can invest in InvITs?
- In 2019, capital market regulator Securities and Exchange Board of India reduced the minimum investment limits on InvITs and REITs, making them more accessible.
- The minimum subscription limit for REITs was brought down to Rs50,000, from the earlier Rs2 lakh.
- InvIT invests in infrastructure projects.
- The projects can be in sectors such as transport (road, bridges, railways), energy (electricity generation, transmission, distribution), communication, etc.