Dealmaking in Indian Infrastructure and InvITs
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Key Takeaways

  • Smart meters are essentially a data play – offering unprecedented data that can be used to bring online more green energy, curb electricity loses and reduce costs for consumers
  • The sector has immense depth – USD 30 bn over just the next 2-3 years
  • Large appetite for smart meter concession from global investors – largely due to robust payment mechanism and revenue protected concession model
  • Potential for high IRR – with low cost ESG debt and capital recycling from the substantial revenue generated during the construction phase
  • Underlying technology has larger application – including in the emerging water sector
  • Smart meter concessions under RDSS considered part of “Electricity Distribution” by Ministry of Power, glide path to InvITs opened up

Nominee directors, stewardship principles, governance requirements and more – the most recent round of governance-focussed amendments to the InvIT regime clearly demonstrate SEBI’s keenness to continue “developing” one of its most successful products: infrastructure investment trusts (InvITs).


However, each amendment seems to be introducing common changes for both public and private InvITs, indicating a broad-brush approach by SEBI. Naturally, the question which comes up – should there be a distinction between private InvITs which house institutional investors and public InvITs which house retail investors?


In this piece, we look at how InvITs were originally rolled out, SEBI’s most recent changes and what it means for the industry, and the future of private InvITs.

Holding companies are quite common in the infrastructure sector since concessions often require a separate entity to be incorporated. That gives rise to the ‘CIC risk’, in the form of approval requirements, leverage limits and investment restrictions – which tends to make investors apprehensive. However, with careful structuring, much of that risk can be mitigated, and hold cos may even be able to walk away from the CIC classification altogether. And even if it were to become a CIC, the implications may not always be as severe as they appear at first glance.


In this analysis, we unpack the commercial and legal impact which CIC regulations can have on investors and holding companies. We also set out potential solutions which can be exercised to mitigate those risks.

Enough has been written about the impact of Budget 2023 on REITs and InvITs. Through this piece, we aim to succinctly capture the what, why and what next of the proposed changes – keeping it germane mainly to global financial investors.


As infrastructure takes center-stage in the Indian growth story, InvITs are increasingly seen as tax optimized monetization vehicles. InvITs, once introduced as a bond proxies, are now no longer mere annuity products. Private listed and unlisted InvITs, driven by their ability to invest in developmental assets and governed by a lighter set of regulations are drawing keen interest from institutional investors.


Unlisted InvITs, armed with the same tax incentives as a listed InvIT, emerged as the clear favorites – until recently when the SEBI required unlisted InvITs to have a diversified set of unitholders and a public float. A public float for unlisted InvITs was not quite as expected, and the perception that unlisted InvITs are no longer the favorite seemed to prevail. Sponsors moved away from unlisted InvITs to private listed InvITs to be safe, yet curiously asking – whats the right way to go?


We discuss the regulatory approach to InvITs as we have seen them evolve over the years, and seen the bell-curve of unlisted InvITs – from being the poster-boys of the Indian infrastructure story to now perceived rejects.

Infrastructure has been the highest capital receiver in 2021, and InvITs continue to be the most favoured investment vehicle for sponsors and global investors alike. InvITs have received >USD 10 billion of investments in the last couple of years, with investments from some of the largest fund houses. The roads regulator of India (NHAI) has also launched its maiden InvIT – with an EV of >USD 1.1bn and participation from large pension funds (CPPIB and OTPP). KKR has again sponsored another InvIT in the renewables space (Virescent Infrastructure) – raising capital from a clutch of investors led by Alberta Investment Management Corporation.


As InvITs flourish, please click below to download our most recent white paper on InvITs which discusses all the key commercial, legal, regulatory and tax considerations relevant to InvITs and the most recent developments in the InvIT regime including the following:

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