In news- Recently, NHAI’s first infrastructure investment trust (InvITs) has raised more than Rs 5,000 crore.
About NHAI’s InvIT-
- The National Highway Authority of India has launched its InvIT under the National Monetisation Pipeline (NMP), which is based on ‘Creation through Monetisation’.
- It seeks to monetise NH projects and has demonstrated a strong ability to attract a wide variety of sophisticated global investors.
- NHAI has the largest share under the NMP as road assets worth Rs 1.60 lakh crore will be monetised over four years till FY25 under the NMP plan.
- NHAI InvIT attracted two international pension funds, Canadian Pension Plan Investment Board and Ontario Teachers’ Pension Plan Board.
- It also attracted diversified Domestic Institutional Investors who invested units worth more than Rs 5,000 cr in InvIT portfolio which currently has 5 National Highways.
- The move is aimed at enabling NHAI to monetise completed national highways that have a toll collection track record of at least one year and it reserves the right to levy toll on the identified highway.
What are Infrastructure Investment Trusts (InvITs)?
- InvITs are instruments on the pattern of mutual funds, designed to pool money from investors and invest the amount in assets that will provide cash flows over a period of time.
- InvITs enable direct investment of money from individual and institutional investors in infrastructure projects to earn a small portion of the income as return.
- It enables developers of infrastructure assets to monetise their assets by pooling multiple assets under a single entity (trust structure).
- In India, InvITs are governed by SEBI (Infrastructure Investment Trusts) (Amendment) Regulations, 2016.
Key features of InvITs-
- The key features of InvITs are mandatory distribution of 90% of net distributable cash flows to the unit investors, leverage cap of 70% on the net asset value, and a cap on exposure to assets under construction (for publicly placed InvITs).
- The sponsor of the InvIT is responsible for setting up the InvIT and appointing the trustee.
The sponsor should hold a minimum 15% of the units issued by the InvIT with a lock-in period of three years from the date of issuance.