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.
