Eye on InVITs

Infrastructure Investment Trusts (InVITs) are in the news again as the National Highway Authority of India (NHAI), through National Highways Infra Trust (NHAI InvIT), has filed prospectus with the Securities Exchange Board of India (Sebi) for the issuance of Non-Convertible Debentures (NCDs) to raise up to Rs 1,500 crore. The NCD issue opens on October 17 and closes on November 7, 2022.

What are InVITs and how do they help in portfolio diversification? InvITs are investment instruments that allow investors to invest directly, and being professionally managed, they provide benefits of ownership in infrastructure projects. They operate like mutual funds and are regulated by Sebi.

Basically, InVITs are trusts that own, operate, and invest in completed as well as under-construction infrastructure projects. These infrastructure assets can be roads and highways, airports, shipping ports, power distribution networks, telecom towers, and fibre optic networks, among others.

InVITs can be bought and sold on similar lines like equities. An investor can go to the dematerialised (demat) account just like in the case of equity and start to trade in public-listed InVITs. One can look forward to earning returns to the tune of 8-10 per cent, while diversifying investments within the same pool.

Since 2014, this form of investment route has been available in India. While InVITs are relatively new in the Indian context, they remain significantly popular at the global level. At present, there are 15 InVITs registered with Sebi.

Currently, the government remains bullish about InVITs as they provide a new avenue to raise funds for various infrastructure projects. However, due diligence needs to be made before taking investment decisions.