Capital Markets: Challenges and Developments

Infrastructure Investment Trusts (InvITs)

Note4Students

From UPSC perspective, the following things are important :

Prelims level : InvITs

Mains level : Not Much

The National Highway Authority of India’s first infrastructure investment trust has raised more than Rs 5,000 crore, informed the Ministry of Road Transport and Highways of India.

What are InvITs?

  • InvITs are like a mutual fund, which enables direct investment of small amounts of money from possible individual/institutional investors in infrastructure to earn a small portion of the income as return.
  • They work like mutual funds or real estate investment trusts (REITs) in features.
  • They can be treated as the modified version of REITs designed to suit the specific circumstances of the infrastructure sector.

How are they notified in India?

  • SEBI notified the Sebi (Infrastructure Investment Trusts) Regulations, 2014 on September 26, 2014, providing for registration and regulation of InvITs in India.
  • The objective of InvITs is to facilitate investment in the infrastructure sector.

Their structure

  • InvITS are like mutual funds in structure. InvITs can be established as a trust and registered with Sebi.
  • An InvIT consists of four elements:
  1. Trustee: He inspects the performance of an InvIT is certified by Sebi and he cannot be an associate of the sponsor or manager.
  2. Sponsor(s): They are people who promote and refer to any organisation or a corporate entity with a capital of Rs 100 crore, which establishes the InvIT and is designated as such at the time of the application made to SEBI, and in case of PPP projects, base developer.
  3. Investment Manager: It is an entity or limited liability partnership (LLP) or organisation that supervises assets and investments of the InvIT and guarantees activities of the InvIT.
  4. Project Manager: It is the person who acts as the project manager and whose duty is to attain the execution of the project and in case of PPP projects.

 

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