This structural separation ensures that unitholders' capital is protected from sponsor bankruptcy or arbitrary management decisions. If the Investment Manager underperforms, the Trustee or unitholders have statutory powers to replace it.
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The InvIT architecture is anchored by a three-party institutional separation designed to balance originator capability, operational management, and fiduciary unitholder protection.
The sponsor establishes the trust and must comply with applicable eligibility, collective sponsor-group retention, lock-in and exit requirements. The trustee provides the prescribed independent oversight. Regulation 12 includes initial and later-period holding requirements; a flat 15% statement does not explain the entire schedule.
The Investment Manager is the executive engine responsible for the operational management of the InvIT, investment decisions, asset acquisitions, debt management, NDCF calculation, distribution planning, and investor relations.
This structural separation ensures that unitholders' capital is protected from sponsor bankruptcy or arbitrary management decisions. If the Investment Manager underperforms, the Trustee or unitholders have statutory powers to replace it.
Verifying that the sponsor satisfies minimum net worth requirements (e.g., ₹100 Cr for public InvITs) and operational experience.
Ensuring the IM has dedicated infrastructure, financial, and legal leadership independent from the sponsor's day-to-day operations.
Reviewing the trust deed provisions governing trustee inspection rights, compliance certifications, and unitholder meeting oversight.
Balancing investment management fees against unitholder yield to maintain aligned performance incentives.
The genius of the InvIT structure is checks and balances. The sponsor originates the assets, the Investment Manager runs the commercial strategy, and the Trustee holds the keys. Understanding and respecting these distinct boundaries is essential for a successful platform.
NorthAxis Advisory supports sponsors, developers and asset owners in assessing InvIT viability, structuring HoldCo/SPV assets, financial modelling and preparing for institutional investor due diligence. All regulated intermediary roles are performed by registered SEBI intermediaries.