The government is expected to approach the capital market in October to raise approximately Rs. 2,500 crore (US$ 305.61 million) to finance three road projects. The funds will be raised through Infrastructure Investment Trusts (InvITs).
Infrastructure Investment Trusts (InvITs) are financial instruments that follow the model of mutual funds. They are created to pool investor capital and invest in assets that will generate cash flows over time.
Two foreign pension funds, the Canadian Pension Plan Investment Board and the Ontario Teachers' Pension Plan Board, as well as various DIIs, invested units in the NHAI InvIT.
As an instrument, InvIT gives investors more flexibility and is anticipated to draw patient capital to the Indian highway market because these investors are cautious about construction risk and are eager in investing in assets that generate steady returns over the long term.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.