National Highway InvIT

In News: National Highways Infra Trust (NHAI InvIT) has raised a sum of Rs 1,430 crore from domestic and international investors for funding its road projects.

• NHAI InvIT is issuing Non-Convertible Debentures (NCDs) which are proposed to be listed on BSE and NSE (collectively, the “Stock Exchanges”).

Infrastructure Investment Trusts (InvIT):

• InvITs are instruments that work like mutual funds.
• They are designed to pool small sums of money from a number of investors to invest in assets that give cash flow over a period of time. Part of this cash flow would be distributed as dividend back to investors.
• InvITs are listed on exchanges just like stocks — through IPOs.
• The InvITs listed on the stock exchange are IRB InvIT Fund and India Grid Trust.
• InvITs are regulated by the Securities and Exchange Board of India (SEBI) (Infrastructure Investment Trusts) Regulations, 2014.
• Real Estate Investment Trusts (REITs) are similar to InvITs but they are present only in Real estate sector.
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About NHAI InvIT:

• The infrastructure investment trust is sponsored by National Highway Authority of India (NHAI) to support Government of India’s National Monetization Pipeline.
• It will have minimum investment amount at Rs.10,000 and will be open to institutional investors, non-institutional investors, high-net-worth individuals, and retail investors including the common man.
• NHAI launched its InvIT to facilitate monetisation of roads and also to attract foreign and domestic institutional investors to invest in the roads sector.
• The advantages of an InvIT instrument are that it has stable and predictable cash flows and experienced professionals manage the InvIT and operate and maintain the roads.

Miscellaneous:

• NHAI has the largest share under the National Monetization Pipeline at 27%.
• Such government initiatives will bring logistics cost down from 13-14% to 5% of GDP.

Source: PIB