InvIT AUM may grow 5-fold in 2 years: Crisil

A slew of new infrastructure investment trusts (InvIT) may hit the financial markets in the coming years after the market regulator Securities and Exchange Board of India (Sebi) changed regulations in April this year.

Sectors such as power transmission, roads, gas pipelines, telecom infrastructure and renewable energy may benefit the most from the upcoming InvITs.

Crisil, which projected that InvIT issuances to grow fivefold to over Rs 2 lakh crore in the next two years, said that the long-term offtake contracts and strong counterparties provide revenue visibility, making five sectors attractive to investors. Other infrastructure assets having similar characteristics, such as ports and airports, may also be suitable for InvITs.


The amendments to the Sebi (Infrastructure Investment Trusts) Regulations, 2014, are well-balanced, Crisil said.

The leverage norms (debt to asset value) for InvITs have been relaxed to 70 per cent from 49 per cent, subject to trusts retaining ‘AAA’ credit rating, along with a track record of six continuous distributions to unitholders.

However, the leverage cap is not applicable to privately placed, unlisted InvITs. While the regulations were introduced in 2014, the first InvIT was floated only in May 2017. Till June 30, 2019, only two InvITs were publicly listed, with a combined asset value of Rs 20,000 crore. The two private listed InvITs, together have assets under management (AUM) of Rs 40,000 crore.

“The relaxation in norms has accelerated the adoption of InvITs as an asset class,” said Sachin Gupta, Senior Director, Crisil Ratings.