InvIT
Also written Infrastructure Investment Trust · Infrastructure Investment Trusts · InvITs
An Infrastructure Investment Trust: a SEBI-regulated trust that pools investor money into infrastructure assets such as roads, power transmission lines and renewable energy projects.
In plain language
A highway earns toll every day for decades. A transmission line earns tariff. These are steady, long-lived cash flows — but a retail investor cannot buy a slice of a highway.
An Infrastructure Investment Trust makes that possible. It pools money from investors and invests in infrastructure assets such as roads, highways, power transmission lines and renewable energy projects. Developers get a structured way to monetise completed assets and recycle capital; investors get a share of the income stream.
InvITs work much like REITs, but hold infrastructure instead of commercial real estate. In India they are regulated by SEBI under the SEBI (Infrastructure Investment Trusts) Regulations, 2014.
How it works
Structure (Chapter 6, section 6.2.3). InvITs are trusts, and the workbook lists five roles:
| Role | Function |
|---|---|
| Sponsor | Sets up the InvIT and contributes initial capital |
| InvIT Trustee | Acts in the interest of investors and monitors the investment manager |
| Investment Manager | Handles asset acquisition, management and compliance |
| Project Manager | Operates and maintains the infrastructure projects |
| Custodian & Valuer | Safeguard assets and ensure fair valuation |
The project manager is the role REITs do not have in the workbook's REIT list — it exists because a road or power line has to be operated, not just owned.
Features claimed by the workbook. Stable income from tolls, electricity tariffs and other infrastructure revenues; access for retail investors; liquidity through stock exchange trading; SEBI-mandated disclosure and governance; inflation hedge and capital growth.
Types (Chapter 6, section 6.3).
| Type | Workbook description |
|---|---|
| Public InvITs | Listed on stock exchanges (NSE and BSE); open to retail investors and institutions |
| Private InvITs | Unlisted and privately placed; only for institutional investors |
| Full-fledged InvITs | Invest in operational, revenue-generating assets; lower risk |
| Developmental InvITs | Invest in under-construction projects; higher risk, potential capital appreciation |
A worked example
Illustrative figures; the workbook describes InvITs qualitatively and gives no worked numbers.
A road developer owns four completed toll roads. It wants capital for new projects but does not want to sell the roads piecemeal.
- The developer acts as sponsor and sets up an InvIT holding the four roads.
- An investment manager is appointed to manage the portfolio; a project manager maintains the roads and collects toll; a trustee watches the investment manager on behalf of unitholders.
- Units are listed on NSE and BSE — a public, full-fledged InvIT, since the roads are already operational.
An investor buys units worth ₹2,00,000. Suppose the trust distributes 8% of unit value in a year from toll collections: she receives ₹16,000. Traffic falls during a slowdown and the next year's distribution drops to 6.5% — ₹13,000. The "stable income" is stable relative to equity dividends, but it is still driven by how many vehicles use the road.
Had the trust held under-construction roads instead, it would be a developmental InvIT: no toll yet, higher risk, and returns dependent on the projects being completed and becoming operational.
Why NISM asks about it
Chapter 6 (Collective Investment Vehicles, 5% weightage) covers InvITs in sections 6.1.3, 6.2.3 and 6.3 alongside mutual funds, REITs and AIFs. Expect questions on the regulation year (2014), the role of the project manager, and the four-way classification — public/private and full-fledged/developmental. A PMS distributor needs this to explain how an InvIT differs from a PMS, where the investor directly owns the securities.
Common exam traps
- The workbook contradicts itself on listing. Section 6.1.3 says InvITs "must be listed on stock exchanges"; the types table in section 6.3 describes private InvITs as unlisted and privately placed. Both are in Chapter 6. For a question on public InvITs, listed is right; for private InvITs, the table's answer (unlisted, institutional only) is right.
- Two separate classifications. Public/private is about listing and who can invest; full-fledged/developmental is about whether assets are operational. One InvIT has a place on both.
- Developmental = higher risk; full-fledged = lower risk because of existing cash flows.
- Private InvITs are for institutional investors only, per the workbook.
- Project manager is an InvIT role, not a REIT role, in the workbook's structure lists.
- The regulation is the SEBI (Infrastructure Investment Trusts) Regulations, 2014 — the same year as the REIT regulations.
Where this is taught
- Series XIX-B · Chapter 1: Overview of Alternative Investmentsintroduced here
- Series XIX-A · Chapter 1: Overview of Alternative Investmentsintroduced here
- Series X-B · Chapter 19: Comparison of Products across categoriesintroduced here
- Series XXI-A · Chapter 6: Collective Investment Vehiclesintroduced here
Related terms
- Alternative Investment FundA privately pooled investment vehicle registered with SEBI that raises money from select Indian or foreign investors under a defined investment policy — never from the public at large.
- CustodianThe SEBI-registered entity that holds a fund's securities in accounts of its own and settles its trades, so the assets sit somewhere other than with the manager who decides what to buy.
- Mutual fundA trust registered with SEBI that pools money from many investors and invests it in securities on their behalf — not a different product from shares and bonds, but a different way of owning them.
- SponsorThe person or firm that sets up the mutual fund — applies to SEBI for registration, executes the trust deed in favour of the trustees, and puts up the capital of the AMC.
- Real Estate Investment TrustA SEBI-registered trust that pools investors' money into commercial real estate and lists its units on a stock exchange, so rent-yielding property can be bought in small lots and sold in a day.
- Infrastructure FundA Category I AIF investing primarily in the unlisted securities, partnership interest or listed and securitised debt of companies and SPVs that operate, develop or hold infrastructure projects.
- Dual CategoryStructures whose underlying assets are illiquid but whose instruments are liquid — listed or redeemable with restrictions — such as REIT and InvIT units and security receipts.
- Fast track rights issuesA quicker rights issue route for listed InvITs and REITs that meet SEBI's parameters — offer document filed with the stock exchanges, with only a copy to SEBI.
- Collective investment vehicleA structure that pools money from many investors and invests it together — in India, mutual funds, REITs, InvITs and AIFs, each following a trust-based model governed by SEBI.
- Equity REITA REIT that owns and manages commercial real estate directly, earning income mainly from rent, as against a Mortgage REIT, which lends against property rather than owning it.
- Mortgage REITA REIT that invests in real estate loans and mortgage-backed securities rather than owning property directly, earning interest income instead of rent.
- Special Purpose VehicleA separate entity, usually a company, floated to hold and develop real estate, in which a REIT or InvIT holds a controlling interest — the indirect route through which a trust owns its assets.