Over ₹3.5-lakh crore of assets to get monetised through InvITs, REITs in next one year: ICRA

Till date, assets worth ₹2.1-lakh crore have been floated through InvITs (64 per cent) and REITs 36 per cent) and these platforms may see over ₹3.5-lakh crore assets getting monetised in next one year, according to ICRA

Infrastructure Investment Trust (InvIT) and Real Estate Investment Trust (REIT) structures are expected to see healthy traction in the near to medium term, supported by the track record of entities which have already floated such structures, enabling regulatory developments and focus on attracting investments into the infrastructure space.

In the last two years, the InvIT space had witnessed monetisation of assets worth ₹85,300 crore . During the same period, all three REITs valued at ₹77,100 crore were listed. With InvITs and REITs now recognised as borrowers under the SARFAESI Act, lenders to these trusts, shall have adequate statutory enforcement options, absence of which was earlier becoming a constraint for bankers to lend directly at trust level.

Insurers’ investment

Further, Insurance Regulatory and Development Authority of India (IRDAI) has recently allowed insurers to invest in debt instruments of InvITs and REITs rated AA and above as a part of their approved investments, which evidences growing comfort of lenders as well as investors around such structures.

Shubham Jain, Group Head & Senior Vice President, Corporate Ratings, ICRA, said, “The supporting regulatory framework for various stakeholders attracted both debt and equity investors towards these trusts. Till date assets worth ₹2.1-lakh crore have been floated through these platforms and they together raised debt of ₹70,800 crore so far majorly through NCD route (62%) and term loans (37%).”

“The capital raising by these trusts is also aided by the favourable view that investors have taken on the long-term revenue generation potential of such infrastructure and real estate assets in the country. In the real estate space, assets worth over ₹1-lakh crore are likely to be listed in the near to medium term,” he said.

“Infrastructure assets with 3 to 5 years of operating track record across roads, gas pipeline, digital fibre, power transmission and renewables are ideal for monetisation through this platform. Of this, assets worth over ₹2.5-lakh crore are expected to be monetized through InvIT in next one year. The Government, for its national monetisation pipeline, is also using these platforms for NHAI, PowerGrid and GAIL among others,” Jain added.