Infrastructure Investment Trust (InvIT)

IN NEWS:

• National Highway Authority of India (NHAI) will soon set up an Infrastructure Investment Trust (InvIT) to facilitate investment in the highway sector.

WHAT ARE INVITS?

• An Infrastructure Investment Trust (InvIT) is a collective investment scheme, similar to a mutual fund, which enables direct investment of money from individual and institutional investors in infrastructure projects to earn a small portion of the income as return.
• The InvIT is designed as a tiered structure with Sponsor setting up the InvIT which in turn invests into the eligible infrastructure projects either directly or via special purpose vehicles (SPVs).
• In case of Public Private Partnership (PPP) projects, such investments can only be through SPV.
• The InvITs are regulated by the SEBI (Infrastructure Investment Trusts) Regulations, 2014.
• InvITs are very much similar to the Real Estate investment Trusts (REITs) in structure and operations. InvITs are modified REITs designed to suit the specific circumstances in India.
• NHAI has been actively working on setting up an InvIT to monetize its completed and operational national highways projects with the objective of mobilizing additional resources through capital markets.

PRELIMS QUESTION:

Q. With reference to Infrastructure Investment Trusts (InvITs), which of the following statements is/are correct:

1. 1.InvITs are regulated by RBI
2. 2.Only public enterprises can invest in InvITs

Select the correct answer using the code given below:

1. 1 only
2. 2 only
3. Both 1 and 2
4. Neither 1 nor 2

Answer to Prelims question