Here's everything you need to know about InvITs ?

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The term ‘InvIT’, or Infrastructure Investment Trust, has been in the news lately due to initial public offerings by IRB Infrastructure and Sterlite Power Grid Ventures, and more are in the pipeline. ET decodes InvIT for you.

1. What are InvITs? Infrastructure investment trusts, or InvITs, are instruments that work like mutual funds. InvITs are designed to pool small sums of money from a number of investors to invest in assets that give cash flow over a period of time. Part of this  ..
The term ‘InvIT’, or Infrastructure Investment Trust, has been in the news lately due to initial public offerings by IRB Infrastructure and Sterlite Power Grid Ventures, and more are in the pipeline. ET decodes InvIT for you.

1. What are InvITs? Infrastructure investment trusts, or InvITs, are instruments that work like mutual funds. InvITs are designed to pool small sums of money from a number of investors to invest in assets that give cash flow over a period of time. Part of this cash flow would be distributed as dividend back to investors.

2. What’s the purpose of an InvIT? Often, infrastructure projects such as roads or highways take some time to generate steady cash flows. Meanwhile, the infrastruct ..
the infrastructure company has to pay interest to banks for the loans taken by it. An InvIT essentially gives the company the leeway to fulfil its debt obligations quickly.

3. What does the structure of an InvIT look like? There are four important parties to an InvIT — sponsors, investment managers, project managers and the trustee. InvITs are formed by complying with the Sebi Infrastructure Investment Trust Regulation, 2014. The infrastructure company interested in getting funds fr ..

There is also a project manager which actually executes the projects. It is overseen by the investment manager. Lastly, since the instrument is essentially a trust, the company will also appoint a trustee, who has to ensure that the functions of the InvIT, investment manager and project manager comply with Sebi rules.

4. How does it benefit investors? There are certain rules that the InvIT issuers have to follow designed to safeguard the investor. First, the sponsor has to hold a mi .. 

5. Who can invest in InvITs? Since the minimum investment amount in an IPO is Rs 10 lakh, InvITs are suitable for high networth individuals, institutional and non-institutional investors like pension funds, foreign portfolio investors, mutual funds, banks and insurance firms. InvITs are listed on exchanges just like stocks — through IPOs.

6. What are the taxes applicable for investors who exit InvITs? If an investor exits an InvIT before three years, a short-term capital gains tax o ..


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