NHAI InvIT: Govt awaits Sebi clearance to replace urban with rural roads

The road stretches in the urban areas, which were part of the earlier InvIT offering, have been removed in the proposal and replaced with the roads in rural areas

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Infrastructure Investment Trust (InvITs) is a Collective Investment Scheme similar to a mutual fund, which enables direct investment of money from individual and institutional investors in infrastructure projects to earn a small portion of the income as return. The InvIT is designed as a tiered structure with Sponsor setting up the InvIT which in turn invests into the eligible. Its aim is to facilitate a steady inflow of private and foreign investments, and thereby augments the capital base available for the growth of key sectors in an economy, as well as its own growth, in a sustained manner.

The Infrastructure Investment Trust (InvIT) by the National Highways Authority of India (NHAI), which is expected to enter the market by the end of this fiscal year, is likely to undergo changes to suit the prospective bidders better. The Union government is awaiting approval from the market regulator Securities and Exchange Board of India (Sebi).

The road stretches in the urban areas, which were part of the earlier InvIT offering, have been removed in the proposal and replaced with the roads in rural areas. One reasoning behind this proposal is that it may attract toll and other revenues, while urban areas generate revenues on their own and therefore may not require funding via the InVit.

InvITs are like mutual funds that enable direct investment of small amounts of money from a possible individual or institutional investors in infrastructure to earn a small portion of the income as a return. In the model, assets are put in an InvIT where investors place money and income generated from such assets is paid as a dividend.he InvIT mechanism is being brought in to generate funds from foreign and domestic institutional investors. Five operational roads have been identified to be transferred to InvIT. Placement memorandum is under progress, and the issue may take place in March 2021 to raise expected funds to the tune of Rs 5,000 crore, the road transport ministry said in an official statement.

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