Infrastructure Investment Trusts (InvITs)
InvITs are infrastructure developer-sponsored trusts that own, operate, and invest in completed/under-construction projects which entitle the unit holder to receive a share of the income generated by the InvIT from its assets.
(Thread)
InvITs are infrastructure developer-sponsored trusts that own, operate, and invest in completed/under-construction projects which entitle the unit holder to receive a share of the income generated by the InvIT from its assets.
(Thread)
1/What are these Infrastructure Assets?
These can be roads and highways, power distribution networks, telecom towers, fiber optic networks, etc.
๐ต๐๐, Let's say we have an infra company that specializes in constructing roads & highways on a Build-Operate-Transfer (BOT) basis,
These can be roads and highways, power distribution networks, telecom towers, fiber optic networks, etc.
๐ต๐๐, Let's say we have an infra company that specializes in constructing roads & highways on a Build-Operate-Transfer (BOT) basis,
2/ means company willย build roads, operateย for a period of time (collect toll as income) & on completion of tenure, willย transfer to govt.
If co. needs funds for construction, it will have to raise either by selling shares (equity), taking a loan (debt) or it can opt for an InvIT
If co. needs funds for construction, it will have to raise either by selling shares (equity), taking a loan (debt) or it can opt for an InvIT
3/ Structure?
- Sponsor: sets upย InvIT and appoints a trustee & holds >15% units (3 yrs lock-in)
- Trustees: hold assetsย on behalf ofย & for the benefit of investors
- Investment Manager: undertakes operational responsibility
- Project Manager: executes & operates projects
- Sponsor: sets upย InvIT and appoints a trustee & holds >15% units (3 yrs lock-in)
- Trustees: hold assetsย on behalf ofย & for the benefit of investors
- Investment Manager: undertakes operational responsibility
- Project Manager: executes & operates projects
4/ Type of InvITs ?
a. Publicly offered listed InvITs - Units offered to public (min 20 investors) & Minimum investment and trading lot - Rs. 1 lacs, now will be changed to 1 unit
a. Publicly offered listed InvITs - Units offered to public (min 20 investors) & Minimum investment and trading lot - Rs. 1 lacs, now will be changed to 1 unit
5/
b. Privately placed listed InvITs - Only to institutional investors (min 5, max 1000) & Minimum investment (Rs. 1 crs/ 25 crs) and trading lot (Rs. 1 cr/ 2 crs)
c. Privately placed unlisted InvITs - Only to institutional investors (max 1000) - Minimum investment (Rs. 1 crs)
b. Privately placed listed InvITs - Only to institutional investors (min 5, max 1000) & Minimum investment (Rs. 1 crs/ 25 crs) and trading lot (Rs. 1 cr/ 2 crs)
c. Privately placed unlisted InvITs - Only to institutional investors (max 1000) - Minimum investment (Rs. 1 crs)
6/ Eligibility ofย Public InvITsย in India ?
- At least 80% of the value to beย completed and income-generating assets
- rest 20% value shall be invested in other eligible investments incl. U/C assets which shall not exceed 10%
- Min. size of offer-250 crs & value of assets-500 crs
- At least 80% of the value to beย completed and income-generating assets
- rest 20% value shall be invested in other eligible investments incl. U/C assets which shall not exceed 10%
- Min. size of offer-250 crs & value of assets-500 crs
7/ Benefits to Developer / Sponsors?
- Monetize revenue-generating infrastructure assets
- Have diverse sources of funding
- Lesser cost of capital
- Management & control over the assets
- Monetize revenue-generating infrastructure assets
- Have diverse sources of funding
- Lesser cost of capital
- Management & control over the assets
8/ Benefits to Unit Holders?
- Investors seeking to diversify can choose to invest in listed infra. assets
- Recurring Income
- Professional management/expertise - comfort on the underlying value
- Regulated by authorities โ ensures transparency
- Tax Efficient
- Investors seeking to diversify can choose to invest in listed infra. assets
- Recurring Income
- Professional management/expertise - comfort on the underlying value
- Regulated by authorities โ ensures transparency
- Tax Efficient
9/ Who all can invest in Public InvITs?
a) Any investor (domestic/foreign/retail/institutional) can buyย InvITย units in India
b) Min. amt of Rs. 1 lacs (now, to be reduced to 1 unit)
c) Unit-holders canย purchase/sellย InvITย units through aย Dematย account, similar to equity shares
a) Any investor (domestic/foreign/retail/institutional) can buyย InvITย units in India
b) Min. amt of Rs. 1 lacs (now, to be reduced to 1 unit)
c) Unit-holders canย purchase/sellย InvITย units through aย Dematย account, similar to equity shares
10/ Howย InvITย distribute returns?
i) Receive income from the infrastructure assets they own (Toll Collection / Electricity Transmission Charges)
ii) Receive interest payments from their subsidiaries orย SPVsย which they have funded to develop the assets
iii) Return of Capital
i) Receive income from the infrastructure assets they own (Toll Collection / Electricity Transmission Charges)
ii) Receive interest payments from their subsidiaries orย SPVsย which they have funded to develop the assets
iii) Return of Capital
11/ Income and Taxability?
- Distribution: Income is tax-exempt, Interest is taxable as per applicable slab
- Capital gains: Short Term (before 3 years) - 15% & Long Term (after 3 years) - 10%
- Distribution: Income is tax-exempt, Interest is taxable as per applicable slab
- Capital gains: Short Term (before 3 years) - 15% & Long Term (after 3 years) - 10%
12/ Risks/Factorsย to beย kept in mind while investing?
i) Possibility of Unpredictable Cash Flows - like Toll Collections
ii) Income stability: Multiple factors like tariff scalability and capacity usage
iii) Small change in regulatory can bring massive changes
- contd.
i) Possibility of Unpredictable Cash Flows - like Toll Collections
ii) Income stability: Multiple factors like tariff scalability and capacity usage
iii) Small change in regulatory can bring massive changes
- contd.
13/
iv) High rate of inflation may increase the sectorโs operating cost
v) ๐๐ข๐๐ ๐จ๐ ๐ญ๐ก๐ ๐๐ฌ๐ฌ๐๐ญ ๐ข๐ฌ ๐ซ๐๐ฌ๐ญ๐ซ๐ข๐๐ญ๐๐ ๐๐ฒ ๐ญ๐ก๐ ๐๐จ๐ง๐๐๐ฌ๐ฌ๐ข๐จ๐ง ๐ฉ๐๐ซ๐ข๐จ๐
Comparison between 3 listed InvITS๐
๐๐ฐ ๐๐ฆ๐ค๐ฐ๐ฎ๐ฎ๐ฆ๐ฏ๐ฅ๐ข๐ต๐ช๐ฐ๐ฏ
iv) High rate of inflation may increase the sectorโs operating cost
v) ๐๐ข๐๐ ๐จ๐ ๐ญ๐ก๐ ๐๐ฌ๐ฌ๐๐ญ ๐ข๐ฌ ๐ซ๐๐ฌ๐ญ๐ซ๐ข๐๐ญ๐๐ ๐๐ฒ ๐ญ๐ก๐ ๐๐จ๐ง๐๐๐ฌ๐ฌ๐ข๐จ๐ง ๐ฉ๐๐ซ๐ข๐จ๐
Comparison between 3 listed InvITS๐
๐๐ฐ ๐๐ฆ๐ค๐ฐ๐ฎ๐ฎ๐ฆ๐ฏ๐ฅ๐ข๐ต๐ช๐ฐ๐ฏ
14/ How REITs differ from InVITs?
Letโs find out what they are and how they differ from each other๐
Letโs find out what they are and how they differ from each other๐
15/ Want to know more about REITs ?
Please find below thread ๐งต๐
Do like, share & re-tweet for maximum reach
Please find below thread ๐งต๐
Do like, share & re-tweet for maximum reach
16/ If you need the above InvITs thread in one place, please go to below link. Thanks for Reading.
#IRBinvit #Indigridinvit #PGinvit #invit #assetallocation
mrinaldhamani.notion.site
#IRBinvit #Indigridinvit #PGinvit #invit #assetallocation
mrinaldhamani.notion.site
Loading suggestions...