Infrastructure Investment Trust : Update
National Highways Authority of India received the Securities and Exchange Board of India’s (SEBI) in-principle approval for ‘Raajmarg Infra Investment Trust’ (RIIT) as an Infrastructure Investment Trust (InvIT).
- It is Collective Investment Scheme similar to a mutual fund, which enables direct investment of money from individual and institutional investors in infrastructure projects
- These are like mutual funds in structure which can be established as a trust and registered with Sebi.
- Objective: To provide retail investors with access to investment opportunities in infrastructure projects, which were previously only available to large institutional investors.
- An InvIT has 4 parties namely; Trustee, Sponsor(s) and Investment Manager and Project Manager.
- INVITs are created by sponsors, who are typically infrastructure companies or private equity firms.
- The sponsor sets up the INVITs and transfers ownership of the underlying infrastructure assets to the trust.
- The trust then issues units to investors, which represent an ownership stake in the trust and thus the underlying assets.
- 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.
- InvITs are regulated by the SEBI (Infrastructure Investment Trusts) Regulations, 2014.
