Govt won’t sponsor roads sector InvITs; plans to bring retail investment

The Centre has dropped a plan to bring public money into infrastructure development through government-sponsored road and highway sector Infrastructure Investment Trusts (InvITs), reported Livemint.

Ministry of Road Transport and Highways of India is now planning to bring retail investment for infrastructure development through non-government, private sector InvITs, for which the Centre is waiting for Sebi’s nod, reported Livemint quoting government officials.

InvITs are collective investment vehicles that allow direct investments from individual and institutional investors in infrastructure projects, and give them a small portion of the income in returns. Developers can monetise their assets through InvITs by pooling multiple infrastructure assets under a single entity (trust structure).

Earlier, the government’s plan was to raise money from small investors through multiple road and highway InvITs with assured returns backed by sovereign guarantees. But, due to the long gestation period of highway projects and fluctuating revenue streams, instead of giving assured returns, the Centre will now leave it to the market to determine returns, the officials told Livemint.

“Government will not directly sponsor any more public InvITs. The NHAI InvIT, which was launched last year, is now an independent trust and not a public sector undertaking. So, even they can convert the private nature of their InvITs into public once Securities and Exchange Board of India (Sebi) clearance is available for road and highways sector investment trusts to go public and tap funds from retail investors,” one of the two government officials told the business daily.

This means that the ministry will not sponsor new public InvITs and all private InvITs can now tap funds from retail investors.

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