@KirtanShahCFP Thanks for simplifying and sharing about InvITs Kirtan. Some further context from my side:
1. Background: The government has announced an aggressive spend target of ₹100 lakh crore over next five years to revamp India's infrastructure (roads, power transmission, gas pipelines)
1. Background: The government has announced an aggressive spend target of ₹100 lakh crore over next five years to revamp India's infrastructure (roads, power transmission, gas pipelines)
@KirtanShahCFP 2. How do they even finance that sum?
Equity in infrastructure is seen as risk prone and Debt (Project Financing) has been scaled down by Banks over last few years
thehindubusinessline.com/opinion/editor…
This is where a structure such as InvIT comes in. Think of it as Mutual Funds, with...
Equity in infrastructure is seen as risk prone and Debt (Project Financing) has been scaled down by Banks over last few years
thehindubusinessline.com/opinion/editor…
This is where a structure such as InvIT comes in. Think of it as Mutual Funds, with...
@KirtanShahCFP ..key difference being that these InvITs would hold infrastructure assets instead of financial securities held under MFs.
3. Also the risk-rewards make them a hybrid between Debt and equities - just the right mix in my opinion, if India is to achieve it's aggressive target.
3. Also the risk-rewards make them a hybrid between Debt and equities - just the right mix in my opinion, if India is to achieve it's aggressive target.
@KirtanShahCFP 4. What is the structure of an InvIT?
Explaining it via the shared diagram.
Four parties:
1. Sponsors: Set up InvITs
2. Trustees: Oversight and ensures all rules are complied with
3. Investment Managers: Manages investments
4. Project Managers: Executes projects under InvIT
Explaining it via the shared diagram.
Four parties:
1. Sponsors: Set up InvITs
2. Trustees: Oversight and ensures all rules are complied with
3. Investment Managers: Manages investments
4. Project Managers: Executes projects under InvIT
@KirtanShahCFP 5. Projects under InvIT:
a. At least 80% of the value of an InvIT to be in "completed and revenue-generating infrastructure projects" (explained by Kirtan)
b. Maximum 20% of the total value of InvITs from under-construction (directly or through a Special Purpose Vehicle (SPV).
a. At least 80% of the value of an InvIT to be in "completed and revenue-generating infrastructure projects" (explained by Kirtan)
b. Maximum 20% of the total value of InvITs from under-construction (directly or through a Special Purpose Vehicle (SPV).
@KirtanShahCFP 6. Benefits for
*⃣ Infrastructure developers:
a. Raise capital for financing more infra projects by monetizing stake of infra developers into smaller units
b. Cheaper re-financing due to de-risked operations
c. Transformation from asset heavy to asset light
d. Focus on core work
*⃣ Infrastructure developers:
a. Raise capital for financing more infra projects by monetizing stake of infra developers into smaller units
b. Cheaper re-financing due to de-risked operations
c. Transformation from asset heavy to asset light
d. Focus on core work
@KirtanShahCFP *⃣ Benefits for investors
a. Medium to invest in nation building
b. Easy entry and exit since the units are getting listed
c. Wider spectrum of investment avenues - between debt and equity in terms of risk-reward.
That's it guys. Hope you find this useful.
a. Medium to invest in nation building
b. Easy entry and exit since the units are getting listed
c. Wider spectrum of investment avenues - between debt and equity in terms of risk-reward.
That's it guys. Hope you find this useful.
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