NHAI (National Highway Authorities of India) has filed an application with SEBI (Securities Exchange Board of India) for the first Infrastructure Investment Trust (INVIT) from a government entity, for offering future projects of constructions under this trust which is likely to be taken off by month-end.
What are NHAI’s plans relating to the trust so set up?
NHAI is planning to offer 19 projects with a total worth around 35,000 crores under the INVIT model. From which the projects worth 5,000-6,000 crores would be taken up first. The projects being constructed under this trust would be the ones constructed on government funds or in engineering procurement construction mode as stated by the officials.
Why are trusts like this set-up, what is the concept behind it?
These trusts are set-up mainly for fundraising from the investors. Under the proposed INVIT model, assets would be placed in the infrastructure trust where the investors would put their money in. Dividends are offered from the income earned through the assets. The Union Government is encouraging government entities to monetize their assets for raising funds, besides NHAI, Power Grid Corporation also has plans to set up INVIT but no application has been made with SEBI regarding the same. The funds raised through assets are likely to be used in other future programs.