InvIT

Subject: Economy

Context:

While the Union Cabinet had approved the National Highways Authority of India (NHAI) setting up Infrastructure Investment Trust(s) (InvIT) in December 2019, the company has recently started meeting investor groups, as it prepares to come up with its InvIT issue.

Concept:

• Infrastructure investment trusts are institutions similar to mutual funds, which pool investment from various categories of investors and invest them into completed and revenue-generating infrastructure projects, thereby creating returns for the investor.
• The capital market regulator notified the Sebi (Infrastructure Investment Trusts) Regulations, 2014 on September 26, 2014, and these trusts are likely to help facilitate investment in the infrastructure sector.
• Structured like mutual funds, they have a trustee, sponsor(s), investment manager and project manager. While the trustee (certified by Sebi) has the responsibility of inspecting the performance of an InvIT, sponsor(s) are promoters of the company that set up the InvIT.
• In case of Public–private partnership (PPP) projects, it refers to the infrastructure developer or a special purpose vehicle holding the concession.
• While the investment manager is entrusted with the task of supervising the assets and investments of the InvIT, the project manager is responsible for the execution of the project.
• NHAI’s InvIT will be a Trust established by NHAI under the Indian Trust Act, 1882 and SEBI regulations. The InvIT Trust will be formed the objective of investment primarily in infrastructure projects.