Types Of InvITs

When it comes to investing in infrastructure, InvITs have become a popular choice for both retail and institutional investors. But did you know there are different types of InvITs that cater to various investor needs? 

Understanding these categories can help you decide which one aligns best with your financial goals.

Types of InvITs Based on Offering

One of the most common ways to classify InvITs is by how they’re offered to investors.

• Public InvITs:
  
  • Listed on stock exchanges, accessible to retail investors.
  • Units can be bought and sold like company shares.
  • Highly regulated by SEBI for transparency and investor protection.
  • Example: Powergrid Infrastructure Investment Trust (PGInvIT).
• Private InvITs:
  • Not listed on stock exchanges.
  • Open only to institutional investors and high-net-worth individuals.
  • Less liquid than public InvITs.
  • Often invest in more complex or high-growth projects, which may carry higher risks.

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InvITs Based on Asset Type

InvITs can also be categorized by the type of infrastructure assets they hold. 

This is a great way to diversify your portfolio. Some InvITs focus on:

• Roads and Highways:
  
  • Income from toll collections and/or government-backed annuity payments.
  • Example: National Highways Infra Trust (NHIT).
• Power Transmission:
  
  • Own and operate power transmission lines and substations.
  • Revenue comes from long-term agreements to transmit electricity.
  • Example: IndiGrid.
• Telecom Infrastructure:
  
  • Own and manage telecom towers or fiber optic networks.
  • Lease them to telecom operators for steady, predictable income.
• Renewable Energy / Solar & Wind:
  
  • Own and operate renewable energy projects like solar parks and wind farms.
  • Revenue comes from long-term power purchase agreements (PPAs) with utilities

Example: InvITs focused on renewable energy are emerging in India, reflecting the growing focus on clean energy infrastructure.

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Who Regulates the Infrastructure Investment Trust?

SEBI (Securities and Exchange Board of India) plays a crucial role in regulating different types of InvITs to ensure transparency and fairness for the investors.

• Registration & Approval – Every InvIT must be registered with SEBI before launch. Example: IRB InvIT Fund had to meet SEBI’s approval to list publicly.
• Minimum Investment Requirement – For Public InvITs, SEBI set a lower entry barrier (around ₹10,000–₹15,000), while Private InvITs have a much higher threshold (in crores).
• Mandatory Income Distribution – SEBI requires InvITs to distribute at least 90% of net distributable income to investors.

          Example: Raj, a Public InvIT investor, receives regular dividends from toll road collections because of this rule.

• Disclosure & Transparency – InvITs must regularly disclose financial performance and project updates. This ensures investors, big or small, stay informed.
• Warehousing: With the booming E-commerce sector, warehousing InvITs are becoming popular. They generate revenue through long-term lease agreements with logistics, e-commerce, and manufacturing companies.

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If you are interested to invest in InvITs in India then begin your journey now. To start begin the process of opening a Demat account with reliable stock brokers.

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Benefits of InvITs

• Better Decision-Making – A retail investor like Anita, who wants steady returns with low entry cost, will choose Public InvITs.
• Long-Term Growth Opportunities – Large institutions, like pension funds, prefer Private InvITs to support renewable energy or highway projects.
• Portfolio Diversification – InvITs allow exposure to infrastructure a sector usually inaccessible to small investors.
• Liquidity vs Stability Balance – Public InvITs offer liquidity (easy buy/sell), while Private InvITs provide stability.
• Clarity on Investment Suitability – Beginners understand which category they can access, avoiding confusion or wrong choices.

Risks Associated with InvITs

• Operational Risk: The income of an InvIT depends on the performance of its underlying assets.
• Interest Rate Risk: InvITs are often seen as income-generating assets, and their unit prices can be sensitive to changes in interest rates.
• Regulatory Risk: Changes in government policies or regulations can directly affect an InvIT’s revenue.
• Concentration Risk (especially for Private InvITs): An InvIT’s portfolio might be highly concentrated in a specific asset or sector.

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Conclusion

Understanding the types of InvITs helps you align your investment strategy with your risk appetite and financial goals. 

Whether you’re looking for stable, predictable income from operational assets or are comfortable with the higher risk of private trusts, there’s likely an InvIT that’s a good fit for you. 

Always remember to do your own research and understand the underlying assets before you invest.

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FAQs

Q1. What is the main difference between an InvIT and a mutual fund? 

InvITs invest in physical, income-generating infrastructure projects, while mutual funds primarily invest in stocks, bonds, and other financial securities.

Q2. Are InvITs a good investment for retail investors?

 Publicly listed InvITs can be a good option for retail investors seeking stable income and portfolio diversification, but it’s important to understand the associated risks.

Q3. How do InvITs generate returns for investors? 

They generate returns mainly through dividends and interest paid out from the income of the underlying infrastructure assets.

Q4. Which type of InvIT is best for beginners?

Public InvITs, as they are accessible and easy to trade.

Q5. Who regulates InvITs in India? 

InvITs are regulated by the Securities and Exchange Board of India (SEBI).