An Infrastructure Investment Trust is a SEBI-regulated express trust that aggregates operational infrastructure assets, issues tradeable units to investors, and distributes at least 90% of net cash flows back to unit holders.
An InvIT is an investment trust established under the Indian Trusts Act, 1882, and registered under the SEBI (Infrastructure Investment Trusts) Regulations, 2014. It holds direct or indirect ownership (via HoldCo/SPVs) in eligible infrastructure assets as defined by the Government of India Harmonized Master List.
Think of an InvIT as a mutual fund for completed infrastructure. Instead of holding shares, the trust owns toll highways, power transmission lines, or solar plants. The toll or power tariff collected every day pays for operating costs and debt, and the remaining cash is deposited directly into investors' accounts as regular quarterly distributions.
A developer spends ₹2,000 Crore building a 400-kilometer toll highway. The road is finished and cars are paying tolls daily. Instead of waiting thirty years to recover its equity, the developer transfers the road into an InvIT. Thousands of domestic and global institutions buy units in the InvIT. The developer receives ₹2,000 Crore in cash to build new highways, while unitholders receive steady cash yields every quarter.
An InvIT holds ₹5,000 Cr in highway assets. Annual revenue is ₹600 Cr. Operations & maintenance take ₹100 Cr, trust administrative expenses take ₹20 Cr, and debt service takes ₹180 Cr. Net Distributable Cash Flow (NDCF) is ₹300 Cr. Under SEBI rules, at least 90% (₹270 Cr) must be distributed to unitholders, providing a stable 8.5% to 9.5% distribution yield on equity.
Establishing an InvIT requires massive operational restructuring. The developer is no longer a private promoter who can move funds between companies; every transaction between the developer and the InvIT is governed by independent valuations, trustee sign-offs, and public market disclosures.
Evaluate an InvIT when your infrastructure assets have stabilized, construction risks are complete, and your company needs to unlock equity to fund greenfield pipelines without taking on expensive corporate debt.