Union Road Transport and Highway Minister Nitin Gadkari has announced that the government is formulating a new model where small investors would be allowed to invest in infrastructure projects.
Giving an outline of ‘ InvITs’, he said the government will be listing InvITs on stock exchanges to enable retail investors to trade in units.
The minister said “The government will soon list InvITs on the stock market so that retail investors can trade units, offering an opportunity to common citizens to invest in the infrastructure projects, ” He was speaking at the Roads and Highways Summit, organised by FICCI.
Infrastructure Investment Trusts (InvITs) are instruments on the pattern of mutual funds which can assure a 7 to 8% annual return. Invested in either road toll projects or power projects, InvITs are designed to pool money from investors and invest in assets that will provide cash flows over a period of time.
Governed by SEBI (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, InvITs is a collective investment method which enables direct investment of money from individual and institutional investors in infrastructure projects. Developers of infrastructure assets can monetise their assets by pooling multiple assets under a trust structure single entity.
The government is planning to approach the capital market to raise funds for four road projects with an investment limit of ₹10 lakh for retail investors.
“In the near future, National Highways Authority of India (NHAI) will be monetising various road projects through a mix of InvITs and toll-operate-transfer (TOT) model,” Gadkari said.