CORPORATE WISDOM · INVIT AND INFRASTRUCTURE

SPV in an InvIT

In One Sentence

A Special Purpose Vehicle (SPV) in an InvIT is the project-level subsidiary company that directly owns, maintains, and operates a specific infrastructure concession or asset.

SPV eligibility: assess the applicable infrastructure investment, ownership, control and permitted-activity requirements.

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PRACTICAL FRAMEWORK

Executive Perspectives & Ground Reality

Literal Meaning

A dedicated corporate entity incorporated for the specific purpose of developing, building, or operating an infrastructure asset under a concession agreement or statutory license, held by the InvIT directly or via HoldCo.

Plain Language

Every single highway, power substation, or solar plant in India is legally housed in its own private company to isolate risk. These are SPVs. When an InvIT is created, the trust buys the shares of these SPVs from the sponsor.

Picture It

'Jaipur Expressway Private Limited' is an SPV. It holds the 30-year concession agreement with NHAI, operates the toll plazas, and collects toll fees into its dedicated escrow account.

See the Numbers

Hypothetical illustration: if SPV-level NDCF is ₹60 Cr after applying the prescribed computation and adjustments, 90% is ₹54 Cr. Toll collections less operating costs and taxes alone do not establish statutory NDCF; debt obligations, restricted cash and other required adjustments must also be assessed.

Ground Reality

Each SPV must be ring-fenced. Any historic corporate guarantees given by the sponsor for an SPV must be formally replaced or extinguished prior to closing.

Decision View

Audit each SPV's legal records, concession extensions, and lender liens to ensure clean ownership transfer to the trust.

ASK MANISH KNOWLEDGE BRIDGE

How should existing project debt be evaluated before creating an InvIT?

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What SPV in an InvIT Is Not

SPV in an InvIT and Multi Purpose Operating Entity

Each project SPV is a dedicated ring fenced legal company that holds specific concession agreements, project debt, and operational assets.

SPV in an InvIT and Discretionary Dividend Distributor

SPVs in an InvIT structure are legally obligated to distribute at least 90% of their net distributable cash flows to the HoldCo or Trust.

SPV in an InvIT and Uncontrolled Promoter Subsidiary

Once acquired by the InvIT, SPV governance is transferred under the supervision of the Investment Manager and Trustee.

SPV in an InvIT and Commingled Balance Sheet

An SPV liabilities and project risks are ring fenced to ensure that distress in one concession does not directly infect other trust assets.

Questions Business Leaders Ask About SPV in an InvIT

Have all historical project loan covenants and share pledge agreements in each SPV been reviewed for transferability?

Lender NOCs are the number one bottleneck in SPV transfers.

NORTHAXIS ADVISORY · INVIT SPECIALISATION

InvIT Readiness, Structuring & Capital Markets Advisory

NorthAxis Advisory supports infrastructure developers, sponsors and asset owners in assessing InvIT viability, cash-flow predictability, HoldCo/SPV holding structures, valuation readiness and governance frameworks. All regulated intermediary roles are performed by registered SEBI intermediaries.

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