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NHAI’s Infra Investment Bonds

Context:

Road Transport and Highways Minister tweeted a video about the National Highways Infra Trust (NHAI InvIT) bonds, which he said will offer an effective return of 8.05% per annum.

Relevance:

GS III: Indian Economy

Dimensions of the Article:

  1. What is NHAI’s InvIT?
  2. What are InvITs?

What is NHAI’s InvIT?

  • NHAI InvIT is the infrastructure investment trust sponsored by the National Highways Authority of India (NHAI) to support the government’s National Monetisation Pipeline (NMP).
  • NHAI’s InvIT is a Trust established by NHAI under the Indian Trusts Act, 1882 and SEBI (Security and Exchange Board of India) regulations.
  • The Union Cabinet chaired by Prime Minister Narendra Modi had approved the NHAI’s Infrastructure Investment Trust (InvIT) in December 2019, and the company had started to meet investor groups the following year.

What are InvITs?

  • Infrastructure investment trusts are institutions similar to mutual funds, which pool investments from various categories of investors and invest them into completed and revenue-generating infrastructure projects, thereby creating returns for the investor.
  • The capital market regulator notified the SEBI (Infrastructure Investment Trusts) Regulations, 2014 on
  • September 26, 2014, and these trusts are likely to help facilitate investment in the infrastructure sector.
  • Structured like mutual funds, they have a trustee, sponsor(s), investment manager and project manager. While the trustee (certified by Sebi) has the responsibility of inspecting the performance of an InvIT, sponsor(s) are promoters of the company that set up the InvIT.
  • In the case of Public-private partnership (PPP) projects, it refers to the infrastructure developer or a special purpose vehicle holding the concession.
  • While the investment manager is entrusted with the task of supervising the assets and investments of the InvIT, the project manager is responsible for the execution of the project.

-Source: Indian Express


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