Thread by @mrinaldhamani

Infrastructure Investment Trusts (InvITs)

InvITs are infrastructure developer-sponsored trusts that own, operate, and invest in completed/under-construction projects which entitle the unit holder to receive a share of the income generated by the InvIT from its assets.

(Thread)

1/What are these Infrastructure Assets?
These can be roads and highways, power distribution networks, telecom towers, fiber optic networks, etc.

𝑵𝒐𝒘, Let's say we have an infra company that specializes in constructing roads & highways on a Build-Operate-Transfer (BOT) basis,

2/ means company will build roads, operate for a period of time (collect toll as income) & on completion of tenure, will transfer to govt.
If co. needs funds for construction, it will have to raise either by selling shares (equity), taking a loan (debt) or it can opt for an InvIT

3/ Structure?
- Sponsor: sets up InvIT and appoints a trustee & holds >15% units (3 yrs lock-in)
- Trustees: hold assets on behalf of & for the benefit of investors
- Investment Manager: undertakes operational responsibility
- Project Manager: executes & operates projects

4/ Type of InvITs ?
a. Publicly offered listed InvITs - Units offered to public (min 20 investors) & Minimum investment and trading lot - Rs. 1 lacs, now will be changed to 1 unit

5/
b. Privately placed listed InvITs - Only to institutional investors (min 5, max 1000) & Minimum investment (Rs. 1 crs/ 25 crs) and trading lot (Rs. 1 cr/ 2 crs)
c. Privately placed unlisted InvITs - Only to institutional investors (max 1000) - Minimum investment (Rs. 1 crs)

6/ Eligibility of Public InvITs in India ?
- At least 80% of the value to be completed and income-generating assets
- rest 20% value shall be invested in other eligible investments incl. U/C assets which shall not exceed 10%
- Min. size of offer-250 crs & value of assets-500 crs

7/ Benefits to Developer / Sponsors?
- Monetize revenue-generating infrastructure assets
- Have diverse sources of funding
- Lesser cost of capital
- Management & control over the assets

8/ Benefits to Unit Holders?
- Investors seeking to diversify can choose to invest in listed infra. assets
- Recurring Income
- Professional management/expertise - comfort on the underlying value
- Regulated by authorities – ensures transparency
- Tax Efficient

9/ Who all can invest in Public InvITs?
a) Any investor (domestic/foreign/retail/institutional) can buy InvIT units in India
b) Min. amt of Rs. 1 lacs (now, to be reduced to 1 unit)
c) Unit-holders can purchase/sell InvIT units through a Demat account, similar to equity shares

10/ How InvIT distribute returns?
i) Receive income from the infrastructure assets they own (Toll Collection / Electricity Transmission Charges)
ii) Receive interest payments from their subsidiaries or SPVs which they have funded to develop the assets
iii) Return of Capital

11/ Income and Taxability?
- Distribution: Income is tax-exempt, Interest is taxable as per applicable slab
- Capital gains: Short Term (before 3 years) - 15% & Long Term (after 3 years) - 10%

12/ Risks/Factors to be kept in mind while investing?
i) Possibility of Unpredictable Cash Flows - like Toll Collections
ii) Income stability: Multiple factors like tariff scalability and capacity usage
iii) Small change in regulatory can bring massive changes
- contd.

13/
iv) High rate of inflation may increase the sector’s operating cost
v) 𝐋𝐢𝐟𝐞 𝐨𝐟 𝐭𝐡𝐞 𝐚𝐬𝐬𝐞𝐭 𝐢𝐬 𝐫𝐞𝐬𝐭𝐫𝐢𝐜𝐭𝐞𝐝 𝐛𝐲 𝐭𝐡𝐞 𝐜𝐨𝐧𝐜𝐞𝐬𝐬𝐢𝐨𝐧 𝐩𝐞𝐫𝐢𝐨𝐝

Comparison between 3 listed InvITS👇

𝘕𝘰 𝘙𝘦𝘤𝘰𝘮𝘮𝘦𝘯𝘥𝘢𝘵𝘪𝘰𝘯

14/ How REITs differ from InVITs?

Let’s find out what they are and how they differ from each other👇

15/ Want to know more about REITs ?

Please find below thread 🧵👇

Do like, share & re-tweet for maximum reach

https://twitter.com/mrinaldhamani/status/1406491866736984068?s=20

16/ If you need the above InvITs thread in one place, please go to below link. Thanks for Reading.

#IRBinvit #Indigridinvit #PGinvit #invit #assetallocation

mrinaldhamani.notion.site/Infrastructure…

17/ Updated comparison for Q1 FY22 Results of Indigrid and IRB InVITs 👇

PG InVIT will declare it's result post completion of 1 full Qtr post listing i.e Q2 FY22.

Source: Respective Investor Presentations #indigrid #pginvit #irbinvit

18/ Updated comparison for Q2 FY22 Results of Indigrid, PG InVIT and IRB InVIT

PG InVIT declared it's 1st distribution post listing.

Source: Respective Investor Presentations #indigrid #pginvit #irbinvit

19/ Updated comparison for Q3 FY22 Results of Indigrid, PG InVIT and IRB InVIT

Missed posting earlier.

Source: Respective Investor Presentations #indigrid #pginvit #irbinvit

20/ Updated comparison for Q4 FY22 Results of Indigrid, PG InVIT and IRB InVIT

Source: Respective Investor Presentations #indigrid #pginvit #irbinvit

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