What is an InvIT Fund?

Infrastructure Investment Trusts (InvITs) are investment vehicles that pool capital from investors to acquire, manage, and operate infrastructure assets such as highways, power transmission lines, and renewable energy projects. They function like mutual funds but invest in infrastructure, aiming to deliver stable and regular returns backed by predictable cash flows from long-term contracts and regulated tariffs.

2. How Can You Invest in InvIT Funds?
3. Is InvIT Regulated?
4. Structure of an InvIT Fund
5. Key Features and Benefits
6. Risk Considerations
7. Conclusion

1.How Can You Invest in InvIT Funds?

Investors can participate in InvITs in two main ways:

• Initial Public Offering (IPO)**: Subscribe to InvIT units during the IPO window via a demat account and trading platform.
• Secondary Market**: Buy listed InvIT units directly from stock exchanges (such as NSE or BSE), just as you would purchase shares. The minimum investment has recently been reduced to ₹10,000-₹15,000, increasing accessibility for retail investors.

2.Is InvIT Regulated?

Yes, InvITs are tightly regulated by the Securities and Exchange Board of India (SEBI) under the Infrastructure Investment Trusts Regulations, 2014. SEBI mandates strict rules for portfolio construction, minimum investment in completed projects, mandatory income distributions, governance structures, and disclosures, ensuring transparency and protection of investor interests.

3.Structure of an InvIT Fund

InvITs follow a robust, multi-tiered structure for accountability and transparency:

• Sponsor**: Sets up the InvIT, transfers infrastructure assets, and retains a mandatory 15% stake for at least three years.
• Trustee**: Holds assets on behalf of unitholders and ensures regulatory compliance.
• Investment Manager**: Formulates strategy, manages acquisitions, and oversees performance.
• Project Manager**: Handles daily operations and maintenance of infrastructure assets.
• SPVs (Special Purpose Vehicles)**: May be used to hold specific projects and contracts, especially with government agencies or corporates.

4.Key Features and Benefits

• Stable Income**: InvITs are required to distribute at least 90% of their income to unitholders, ensuring steady returns.
• Diversification**: Infrastructure assets often have low correlation with equity or bond markets, adding diversity to investor portfolios.
• Transparency**: SEBI mandates full disclosure of financials, asset performance, and operations.
• Tax Efficiency**: Income is taxed only in the hands of investors, not at the trust level, making returns more efficient.

5.Risk Considerations

While InvITs offer steady income and diversification, risks include regulatory changes, sector or asset-specific challenges, interest rate fluctuations, and moderate liquidity compared to traditional equity investments. Investors are encouraged to review asset quality, management effectiveness, and overall risk before investing.

6.Conclusion

InvIT Funds are transforming infrastructure investment in India, balancing financing needs of developers with regular returns for investors. Growing regulatory oversight, increasing sector participation, and declining minimum investment requirements make InvITs a promising option for those seeking stable, long-term financial growth through infrastructure exposure.

For further details, refer to SEBI’s InvIT regulations and consult your financial advisor to align such investments with your risk profile and financial goals.