INVIT: AN INNOVATIVE WAY OF MONETIZING INFRASTRUCTURE ASSETS IN INDIA
Infrastructure Investment Trust (InvIT), one of the recent innovative financial instruments, has been gaining momentum right from its inception in India in 2016. India has seen 18 instances of InvIT instruments being issued, the first as early as March 2016 and the latest one has come out in April 2022. These instruments are unique in many ways i.e. they are backed mainly by operational assets hence construction related risk are absent. Investors get an option of diversifying their portfolio by including infrastructure assets in them. Since majority (90% of Net Distributable Cash Flow) of the earning is necessarily distributed, its like income instrument; since it is a trust this instrument enjoys tax advantages. This instrument helps release the funds from the infrastructure projects at that stage of the project life cycle when the risk has substantially reduced. Expectedly the returns on these instruments should be lower than infrastructure funds employed for the entire lifecycle, at the same time higher than debt instruments. Analysis of returns (over a period on last 54 weeks) on existing liquid InvIT instruments corroborates the above facts. There is an aberration of PGCIL’s InvIT having negative correlation with NIFTY Infra Index. This may be because of a couple of reasons; (a). This instrument is still in its infancy; hence is yet to attain necessary liquidity (b) Last couple of years are having Covid 19; hence the cash-flows for a few assets have seen abnormal fluctuations. InvIT seems to be a promising investment instruments for Indian infrastructure space.
XI. évf. 2023. SPECIAL ISSUE1 20-25
DOI: 10.24387/CI.2023.SPECIAL ISSUE.3
