InvITs today are managing assets worth over ₹4 lakh crores across various infrastructure sectors with a potential of further addition by ₹6-8 lakh crores over the next decade.
Regulated, transparent and liquid way to invest in infrastructure assets through InvITs with varying investment quantum.
India Grid Trust has distributed ₹ 82.41 per unit, amount to ₹ 4,667 crores, to its investors since listing in June 2017 till December 2023.
Infrastructure Investment Trusts (InvITs) were introduced in the Indian market in 2014 and over the last decade have emerged as an instrument of choice for portfolio diversification providing superior risk-adjusted total returns.
Today India has 24 InvITs registered with SEBI which have raised over ₹1 lakh crores in equity since 2019. Out of 24, 14 InvITs are privately listed and 4 are publicly listed. The 4 publicly listed InvITs have a combined market capitalization of ~₹ 25,000 crores.
Over the last decade, Infrastructure development in India has seen a lot of growth attracting an investment of ₹ 67+ lakh crores since 2017. Additionally, with the Government’s ambitious National Infrastructure Pipeline (NIP) and National Monetization Plan (NMP), the infrastructural asset development and its monetization is slated to witness momentous growth. With the unique positioning of InvITs in the infra development value chain providing capital churn for developers and investment attractive opportunity to investors, this environment augers very well for their growth.
Historically, investors participated in the infra growth of the country by equity ownership of select developers or OEMs or through debt. However, InvITs have changed this narrative and present an opportunity of direct asset ownership albeit at a fractional investment and with yields accruing at least quarterly/semi-annually.
InvITs are required to operate with high levels of governance and transparency, while owning at least 80% income generating infrastructure assets and also distributing at least 90% of their Net Distributable Cash Flow (NDCF) to their investors semi-annually/quarterly. With a leverage cap at 70% and subject to AAA-rating, InvITs have the ability to prevent over-leveraging in infrastructure assets and lends more visibility of cashflows. This provides additional comfort to investors and an ideal opportunity to invest in infra-assets, through a publicly traded unit, at an investment size of their choice.
Meghana Pandit, Chief Investment Officer, India Grid Trust said, “InvITs are a unique investment platforms. While they provide an opportunity to developers to free-up their capital to invest in new development projects; they provide an opportunity to investors to participate in the infrastructure growth story of our country and earn stable returns.
Operating with high standards of corporate governance and transparency, InvITs are mandated to distribute at least 90% of the Net Distributable Cash Flows they generate back to investors and need atleast 80% of income generating assets in the portfolio. InvITs, with their better-quality assets, ratings and predictable cash flows have proved to be an attractive investment option for investors.”