In News:

The National Highways Authority of India (NHAI) has received SEBI’s in-principle approval to register “Raajmarg Infra Investment Trust (RIIT)” as an Infrastructure Investment Trust (InvIT). This is a step toward expanding public participation in highway infrastructure financing and asset monetisation.

What is an InvIT?

An Infrastructure Investment Trust (InvIT) is a collective investment vehicle, similar in structure to a mutual fund, that allows investors to invest in income-generating infrastructure assets.

• It is set up as a trust and registered with SEBI under the SEBI (Infrastructure Investment Trusts) Regulations, 2014.
• InvITs pool money from retail and institutional investors to invest in infrastructure projects such as highways, power transmission lines, pipelines, and telecom towers.
• Investors receive units of the trust, representing a share in the underlying assets and their cash flows.

Objective of InvITs

InvITs aim to:

• Provide retail investors access to infrastructure investment opportunities that were earlier limited to large institutions
• Enable long-term financing for infrastructure
• Help infrastructure developers monetise operational assets and recycle capital into new projects

Structure of an InvIT

An InvIT typically involves four key entities:

• Sponsor(s)
  • Usually infrastructure developers or financial institutions
  • Transfer infrastructure assets to the InvIT
  • Hold a minimum required stake in the trust
• Trustee
  • Registered with SEBI
  • Ensures the InvIT operates in the interest of unit holders
• Investment Manager: Responsible for managing the InvIT’s assets and making investment decisions
• Project Manager: Handles the operation and maintenance of the underlying infrastructure assets

How InvITs Work

• Sponsors transfer revenue-generating infrastructure assets to the InvIT
• The InvIT raises funds by issuing units to investors
• Income generated from tolls, tariffs, or user charges is distributed to investors, typically as regular cash flows
• InvITs are designed for stable, long-term returns rather than rapid capital appreciation

Regulatory Framework

• Governed by SEBI (Infrastructure Investment Trusts) Regulations, 2014
• SEBI prescribes norms for:
  • Asset composition
  • Minimum public holding
  • Disclosure and reporting standards
  • Distribution of cash flows to investors
• Ensures transparency, investor protection, and standardised governance

NHAI and Raajmarg Infra Investment Trust (RIIT)

• RIIT is NHAI’s proposed Public InvIT for monetising national highway assets
• It aims to unlock value from operational highway projects and provide a long-term investment instrument mainly for domestic and retail investors
• As part of the process for final registration, RIIT must meet regulatory conditions such as:
  • Appointment of directors
  • Submission of financial statements
  • Compliance with SEBI norms within a specified timeframe

NHAI has also set up Raajmarg Infra Investment Managers Pvt. Ltd. (RIIMPL) as the Investment Manager, with participation from major banks and financial institutions.

InvITs in India’s Infrastructure Financing

NHAI has already raised significant funds through:

• -Operate-Transfer (TOT) model – Monetising completed highway stretches
• Private InvITs – Attracting domestic and global investors

Public InvITs like RIIT represent the next step, allowing wider public participation in infrastructure financing.

Significance of InvITs

• Mobiliselong-term capital for infrastructure
• Reduce pressure on government budgets and bank lending
• Improve asset recycling by freeing up developer capital
• Offer investors an avenue for steady income from infrastructure assets