Please enable JavaScript.
Coggle requires JavaScript to display documents.
INFRASTRUCTURE INVESTMENT TRUST (InvITs) - Coggle Diagram
INFRASTRUCTURE INVESTMENT TRUST (InvITs)
Context
Cabinet authorises NHAI to set up Infrastructure Investment Trust and monetize National Highway projects.
Details
• National Highways Authority of India (NHAI) will set up the Infrastructure Investment Trust(s) (InvIT) as per InvIT Guidelines issued by SEBI.
• Under InvIT, highwayprojects will be bundled to form a special purpose vehicle (SPV) to be offered to investors.
• The SPV would then be traded on the stock exchanges, and returns will be linked to the InvIT’s performance in the capital market.
• This will enable the NHAI to monetize completed national highways that have a toll collection track record of at least one year and the NHAI reserves the right to levy toll on the identified highway. About Infrastructure Investment Trusts (InvITs)
• Infrastructure Investment Trusts (InvITs) are mutual fund like institutions that enable investments into the infrastructure sector by pooling small sums of money from multitude of individual investors for directly investing in infrastructure so as to return a portion of the income (after deducting expenditures) to unit holders of InvITs, who pooled in the money.
• InvITscan invest in infrastructure projects, either directly or through a special purpose vehicle (SPV).
• InvITs are regulated by the securities market regulator in India- Securities and Exchange Board of India (SEBI).
• An InvIT consists of four elements
Trustee, who inspects the performance of an InvIT is certified by Sebi and he cannot be an associate of the sponsor or manager.
‘Sponsors’ are people who promote and refer to any organisation or a corporate entity with a capital of Rs 100 crore, which establishes the InvIT.
Investment manager is an entity or limited liability partnership (LLP) or organisation that supervises assets and investments of the InvIT and guarantees activities of the InvIT.
Project manager refers to 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.
• The trust is required to invest a minimum of 80 per cent in revenue generating infra assets. Only the rest can be used for under-construction assets.
• InvITs are suitable for high net-worth individuals, institutional and non-institutional investors like pension funds, foreign portfolio investors, mutual funds, banks and insurance firms.
• InvITs are listed on exchanges just like stocks — through IPOs.
• If an investor exits an InvIT before three years, a short-term capital gains tax of 15 per cent is applicable. There are no long-term capital gains taxes on them.