Latest news with #InvITs
Mint
a day ago
- Business
- Mint
Can diversifying into alternative investments help investors navigate market volatility? LGT Wealth's Viswanath explains
As the name suggests, alternative investments do not belong to conventional investment categories such as stocks or bonds but rather represent a diverse range of financial assets as private equity, private credit, hedge funds, real estate, venture capital, commodities and collectibles. These have grown in popularity in recent years, especially as investors seek to diversify their portfolios by allocating a portion of a portfolio to alternative investments and enhance the long-term investment only do alternative investments have the potential to diversify a portfolio of traditional assets but often deliver performance that is not correlated to traditional markets, helping investors navigate volatility. According to the recent industry reports, the alternative assets market in India currently estimated at $400 billion AUM is projected to grow 5x to $2 trillion over the next decade. Globally the alternative investments have reached an estimated $25 trillion AUM and continues to expand as the investors base and their allocations to private markets increase. Even though India today stands as the world's fourth-largest economy, alternative investments remain underpenetrated at just 4% of GDP, compared to over 10% of GDP in mature markets like the US and Europe with investors allocating as high as 20% of their portfolio to alternatives. This gap presents as a significant growth opportunity in India, especially as family offices, high-net-worth individuals (HNIs) and ultra-HNIs increasingly seek non-traditional, higher-yield assets. Indian investors are participating in alternative investments through allocation to AIFs (Alternative Investment Funds), REITs (Real Estate Investment Trusts), InvITs (Infrastructure Investment Trusts), offshore opportunities through GIFT City-based funds and international platforms. Each asset category has unique characteristics in terms of expected return, risk, yield, liquidity, and capital requirements that require a closer look to better understand the different benefits that it can bring to a portfolio. While some of the asset categories may serve more of a growth and capital appreciation purpose, others may protect portfolios against inflation and/or provide stable income. Some strategies may offer a combination. Historically, alternative investments have offered return premiums to investors willing to accept greater illiquidity and have been shown to meaningfully outperform public markets over time. While access to AIFs has been driven by a mix of macroeconomic, regulatory, and technological forces, yet alternative investments can present their own challenges, requiring an in-depth understanding of the space to evaluate and choose the alternatives suitable to risk profile of the investor. Our team harnesses its global knowledge and experience to carefully curate a set of high-conviction investment strategies in the alternatives space, designed to help investors in appropriate capital allocation. Investors who are beginning their journey in alternatives space can start with shorter tenure (average life of 5 to 7 years) private equity funds which invest in stable businesses with predictable exit scenarios and private credit funds which generates cash yield. This allocation can be enhanced to long tenure equity funds of 8 to 10 years, investing in stellar fund managers with a track record in the fund's investment strategy. There are many nuances in the selection of the fund manager including but not limited to characteristics like having skin in the game, ability to leverage their experience to back transformational companies poised for growth, navigate the market dynamics supporting the portfolio companies and generate the alpha over the investment horizon. Despite the steady growth in alternatives, one of the setbacks in the past few years has been slowdown in liquidity avenues for AIF investors on account of delayed exit options of the underlying portfolio entities of these AIFs. This is expected to improve in the following years as many of these entities will use vibrant capital markets and possible secondaries with wider participation and offer opportunities for investor exits. Investors who thoughtfully allocate to alternatives - balancing risk, liquidity, and long-term vision, could benefit significantly in the next decade. The author, Rajini Viswanath, is the CIO of Alternatives at LGT Wealth India. Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making investment decisions.
Hindustan Times
6 days ago
- Business
- Hindustan Times
Finance dept worried about rising liabilities, wants govt to reduce committed expenditure
MUMBAI: The state finance department has expressed concern over rising liabilities and has stated that the government will have to reduce its revenue expenditure and rationalise its schemes. It has asked the public works department (PWD) to prioritise infrastructure projects, as financial resources need to be used judiciously. Finance dept worried about rising liabilities, wants govt to reduce committed expenditure The department has suggested that megaprojects be undertaken on a build, operate and transfer (BOT) basis, which entails private players doing the build and operate part so that the exchequer is not burdened. This stems from the fact that the state has given guarantees of ₹ 51.44 lakh crore against contingent liabilities till 2024-25 and is spending 22 percent of its total generated revenue for repayment of loans and their interest. The finance department made these remarks while approving funds of ₹ 20,878 crore for land acquisition for the 802-km Nagpur-Goa Shaktipeeth Expressway. The entire amount was taken as a loan from the Housing and Urban Development Corporation (HUDCO). It includes ₹ 12,000 crore for land acquisition and the remaining ₹ 8,787 crore for the payment of interest on the loan. While approving the proposal, the department made certain observations and remarks. It stated that while preparing budgetary estimates for the 16th Finance Commission, it was observed that capital expenditure would grow at a CAGR (compounded annual growth rate) of over 10%, the fiscal deficit would exceed the FRBM (fiscal responsibility budget management) limit of 3%, ranging between 3.13% to 4.08%, and in the next four to five years, the debt to GSDP (gross state domestic product) ratio would reach up to 25%. Moreover, the growth in interest payments by the AA (Account Aggregator) would approach 14%. The department stated that it had repeatedly expressed concerns about key aspects of project management and financial structuring of various major projects being undertaken by the PWD and its corporations. 'It is essential for them to prioritise the projects they have undertaken and ensure the optimal use of financial resources without spreading them too thin.' Apart from suggesting the BOT model for projects, the finance department suggested that the PWD explore alternative financing sources outside the budget, including private investment through the PPP model, monetisation of assets and innovative financial instruments like Infrastructure Investment Trusts (InvITs). It also suggested the PWD prioritise its schemes, which the department has already moved on. The finance department pointed out that HUDCO was giving the PWD a ₹ 20,878-crore loan at 8.85 percent interest, which was 2.1 percent more than what the government paid in the open market. It further asked why the PWD was going ahead with the land acquisition process without having all the environment clearances. Dismissing reports that the remarks were 'objections', CM Devendra Fadnavis said it was the finance department's 'duty to point out things'. Defending the government's taking of loans, he said that every new highway opened doors for the economy. 'When we invest ₹ 12,000 crore in an infrastructure project, the return against the capital amount is multifold, as it expands our economy and also creates more capacity to repay the loan amount,' he said. 'Hence, all countries are developing their infrastructure by taking loans. It is a rule that a loan taken for developing infrastructure is considered as the best loan, as it strengthens the economy.' According to the budget estimates for the financial year 2025-26, the state government is expected to have a total debt of ₹ 9,32,242 crore by March 2026. During FY 2025-26, ₹ 1,54,457 crore will be paid towards debt servicing— ₹ 89,798 crore will go towards repayment of the principal and ₹ 64,659 crore towards interest.
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Business Standard
6 days ago
- Business
- Business Standard
Will no longer continue with toll operate transfer model: Gadkari
In what may come as a shock to investors in the highways sector, the government has decided to no longer move forward with the highly popular monetisation model of toll-operate-transfer (TOT), said Union Minister of Road Transport and Highways Nitin Gadkari. The TOT model allows players to invest in bundles of already operational roads for a concession value paid upfront. The concessionaires then operate, maintain, and benefit from the toll revenue on the highways for a period of 20–30 years. 'We will no longer continue with TOTs. The bundle size is much bigger in TOTs, where domestic players cannot even compete—we will go with InvITs as a priority. There is a monetisation target which includes TOTs, but I have talked to NITI Aayog and explained that I will meet the investment target as far as the government is concerned—but this will be done through InvITs, not TOTs,' the minister told Business Standard in an interview. The pivot, according to Gadkari, is being made as the ministry focuses on awarding more projects through its infrastructure investment trust (InvIT) platform. The minister has publicly criticised TOT investors since as early as 2023. In February this year, the ministry paused all monetisation under the toll rights model after Gadkari and Road Secretary V Umashankar wrote to the National Highways Authority of India (NHAI), seeking a comprehensive review of all TOT bundles awarded to date. 'The TOT model is more favourable for the concessionaire than it is for NHAI,' Gadkari had said in 2023 at a conference of the Highway Operators Association of India. 'On top of excessive returns, TOT bundles are being mostly purchased by foreign funds—I thought that people outside the country were buying the assets of the country, and I am not comfortable with that. I want investors from our country and people from the service class to benefit from investment in highways,' he told this paper. The minister's position appears at odds with NHAI's own declaration in its first-ever asset monetisation strategy document, released on 9 June, where it disclosed plans to offer three TOT bundles per quarter—one small (₹2,000 crore), one medium (₹5,000 crore), and one large (₹9,000 crore). Gadkari said the ministry is now working to bring public investment into InvITs. In the same document, NHAI for the first time stated its intention to set up a public InvIT. 'We want investors from our country to invest in InvITs, and I have signed some files for projects worth around ₹1,500 crore. The InvIT will have investors both from India and abroad. We also want salaried people to invest in InvITs, where they earn an 8.05 per cent return from the investment and also benefit from appreciation in the value of the InvIT units,' the minister said. TOT has been the most preferred monetisation model for the highways ministry, which has been one of the better-performing departments in the government's ongoing asset monetisation drive. The ministry achieved 71 per cent of NITI Aayog's target of ₹1.6 trillion between FY22 and FY25. So far, NHAI has monetised nearly ₹50,000 crore worth of highways under the TOT model, contributing nearly 38 per cent of the ministry's total to the first asset monetisation pipeline. This paper previously reported that the second asset monetisation pipeline—yet to be released—will see national highways contribute nearly 25 per cent of the ₹10 trillion target by 2029–30. Industry players and officials had expected TOTs to play a significant role in that effort.
Time of India
19-06-2025
- Business
- Time of India
Sebi board clears measures to enhance ease of doing business for REITs, InvITs, merchant bankers
NEW DELHI: Markets regulator Sebi board on Wednesday approved measures to enhance the ease of doing business for the activities of Real Estate Investment Trusts ( REITs ) and Infrastructure Investment Trusts ( InvITs ). Also, Sebi has permitted merchant bankers to carry out activities falling outside the purview of the regulator under the same firm. This is subject to certain conditions. Regarding approved regulatory framework for REITs and InvITs, Sebi said that the related parties of the REIT/InvIT and the related parties of the sponsor, investment manager/manager, and project manager would not be considered as "public" unless such related parties are Qualified Institutional Buyers (QIBs). Moreover, they would always be excluded from the "public" category irrespective of their status as QIBs. The board approved several matters that will result in amendments to the REITs as well as and InvITs Regulations 2014. Prior to this amendment, any units held by the related parties of the sponsor, investment manager/manager, and project manager were not counted towards units held by the "public." The amendment now facilitates the classification of units held by the related parties of these entities who are QIBs as public, Sebi said in a statement issued after the conclusion of the board meeting. In another significant move, the board approved an amendment allowing the negative net distributable cash flows generated by a HoldCo (holding company) on its own to be adjusted against the cash received from Special Purpose Vehicles (SPVs) to arrive at the cash flows for distribution by such HoldCo to the REIT/InvIT. This is subject to appropriate disclosures to the unit holders. Earlier, a HoldCo was required to distribute 100 per cent of the cash flows received from the underlying SPVs to the REIT/InvIT. This amendment enables a HoldCo to offset its own negative cash flows before distributing the net amount to the REIT/InvIT. Further, the board approved the alignment of timelines for submission of various reports -- including quarterly reports to be submitted to stock exchanges, trustees, and the board of the investment manager, as well as valuation reports -- with the timelines for submission of financial results. Earlier, different timelines were prescribed for the submission of these reports. Given that quarterly reports included disclosures of financial information and that certain statements in the financial results are derived from valuation reports, it was represented that synchronizing the timelines would enhance efficiency. This has now been addressed through the amendment. Additionally, the board approved the reduction of the minimum allotment lot in the primary market for privately placed InvITs to Rs 25 lakh, aligning it with the trading lot size in the secondary market. Prior to this, the minimum allotment lot in the primary market for privately placed InvITs was Rs 1 crore or Rs 25 crore, depending on the asset mix. However, in an earlier round of reforms, the trading lot size in the secondary market had already been reduced to Rs 25 lakh, irrespective of the asset mix. Accordingly, this amendment introduces a uniform minimum allotment size of Rs 25 lakh in the primary market for all privately placed InvITs, harmonizing it with the secondary market norms. On merchant bankers, the regulator noted that Merchant Bankers Regulations, 1992 have been notified by it in order to regulate merchant banking activities. It has been observed that the merchant bankers (MBs) also undertake significant amount of activities that are not with in the purview of Sebi. In view of the possible risks associated with unregulated activities being carried out by Sebi registered entity, the board in its meeting held in December 2024 had approved that the non-regulated activities be hived off to a separate legal entity. However, post internal review and feedback obtained from market participants, the board has now relaxed the requirement of hiving off and has approved the several amendments to the MB Regulations "MBs shall be permitted to carry out activities that are not regulated by Sebi in the following respects: MB may undertake activities, which are within the purview of any other Financial Sector Regulator (FSR), provided it shall comply with the regulatory framework, if any, as may be specified by the respective FSR," Sebi said. MB may also undertake activities, which are not within the purview of Sebi or any other FSR, provided they are fee-based, non-fund based activities and pertain to financial services sector, it added.
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Business Standard
18-06-2025
- Business
- Business Standard
Sebi clears reforms to ease business for REITs, InvIT structures, bankers
Markets regulator Sebi board on Wednesday approved measures to enhance the ease of doing business for the activities of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs). Also, Sebi has permitted merchant bankers to carry out activities falling outside the purview of the regulator under the same firm. This is subject to certain conditions. Regarding approved regulatory framework for REITs and InvITs, Sebi said that the related parties of the REIT/InvIT and the related parties of the sponsor, investment manager/manager, and project manager would not be considered as "public" unless such related parties are Qualified Institutional Buyers (QIBs). Moreover, they would always be excluded from the "public" category irrespective of their status as QIBs. The board approved several matters that will result in amendments to the REITs as well as and InvITs Regulations 2014. Prior to this amendment, any units held by the related parties of the sponsor, investment manager/manager, and project manager were not counted towards units held by the "public." The amendment now facilitates the classification of units held by the related parties of these entities who are QIBs as public, Sebi said in a statement issued after the conclusion of the board meeting. In another significant move, the board approved an amendment allowing the negative net distributable cash flows generated by a HoldCo (holding company) on its own to be adjusted against the cash received from Special Purpose Vehicles (SPVs) to arrive at the cash flows for distribution by such HoldCo to the REIT/InvIT. This is subject to appropriate disclosures to the unit holders. Earlier, a HoldCo was required to distribute 100 per cent of the cash flows received from the underlying SPVs to the REIT/InvIT. This amendment enables a HoldCo to offset its own negative cash flows before distributing the net amount to the REIT/InvIT. Further, the board approved the alignment of timelines for submission of various reports -- including quarterly reports to be submitted to stock exchanges, trustees, and the board of the investment manager, as well as valuation reports -- with the timelines for submission of financial results. Earlier, different timelines were prescribed for the submission of these reports. Given that quarterly reports included disclosures of financial information and that certain statements in the financial results are derived from valuation reports, it was represented that synchronizing the timelines would enhance efficiency. This has now been addressed through the amendment. Additionally, the board approved the reduction of the minimum allotment lot in the primary market for privately placed InvITs to Rs 25 lakh, aligning it with the trading lot size in the secondary market. Prior to this, the minimum allotment lot in the primary market for privately placed InvITs was Rs 1 crore or Rs 25 crore, depending on the asset mix. However, in an earlier round of reforms, the trading lot size in the secondary market had already been reduced to Rs 25 lakh, irrespective of the asset mix. Accordingly, this amendment introduces a uniform minimum allotment size of Rs 25 lakh in the primary market for all privately placed InvITs, harmonizing it with the secondary market norms. On merchant bankers, the regulator noted that Merchant Bankers Regulations, 1992 have been notified by it in order to regulate merchant banking activities. It has been observed that the merchant bankers (MBs) also undertake significant amount of activities that are not with in the purview of Sebi. In view of the possible risks associated with unregulated activities being carried out by Sebi registered entity, the board in its meeting held in December 2024 had approved that the non-regulated activities be hived off to a separate legal entity. However, post internal review and feedback obtained from market participants, the board has now relaxed the requirement of hiving off and has approved the several amendments to the MB Regulations "MBs shall be permitted to carry out activities that are not regulated by Sebi in the following respects: MB may undertake activities, which are within the purview of any other Financial Sector Regulator (FSR), provided it shall comply with the regulatory framework, if any, as may be specified by the respective FSR," Sebi said. MB may also undertake activities, which are not within the purview of Sebi or any other FSR, provided they are fee-based, non-fund based activities and pertain to financial services sector, it added.
