AUTHORS

Authors:
Anurag Mishra, Senior Clean Energy Specialist, USAID/India

Gaurav Bhatiani, RTI

Namrata Mukherjee, RTI

Mayank Bhardwaj, RTI

Jatin Ramchandani, RTI

Suggested Citation:
SAREP 2022. An Invit(e) to Renewables Growth in India (An InvIT Handbook for the Renewable Energy
Sector); USAID/India, SAREP

Disclaimer - This document is made possible by the support of the American People through the United States Agency for Internat ional Development (USAID).
The contents of this document are the sole responsibility of RTI International and do not necessarily reflect the views of USAID or the United States Government.
LIST OF ACRONYMS
AIMCo - Alberta Investment Management Corporation RE – Renewable Energy
ASBA - Applications Supported by Blocked Amount REC – Renewable Energy Certificates
AUM – Assets Under Management REITs – Real Estate Investment Trusts
CAGR – Compounded Annual Growth Rate SAREP – South Asia Regional Energy Partnership
COP26 - Conference of Parties 26 SEBI – Securities and Exchange Board of India
DCF – Discounted Cash flow SPV – Special Purpose Vehicle
DDUGJY – Deen Dayal Upadhyaya Gram Jyoti Yojana USAID - United States Agency for International Development
EBITDA – Earnings before Interest, Tax, Depreciation and Amortization USD – United States Dollar
EV – Enterprise Value VRET - Virescent Renewable Energy Trust
FCFF – Free Cash flows to firm WACC – Weighted Average Cost of Capital
FDI – Foreign Direct Investment YieldCos – Yield Companies
FEMA - Foreign Exchange Management Act
FPI – Foreign Portfolio Investment
GBI – Generation Based Incentive
GIC - Government of Singapore Investment Corporation
GOI – Government of India
GWp – Gigawatts-peak
HNI – High Net-Worth individual
IndiGrid – India Grid Trust
InvITs – Infrastructure Investment Trusts
IPO - Initial Public Offer
IRDAI - Insurance Regulatory and Development Authority of India
IREDA - Indian Renewable Energy Development Agency
ISTS - Inter State Transmission System
JNNSM - Jawaharlal Nehru National Solar Mission
KUSU - Kisan Urja Suraksha evam Utthaan Mahabhiyan
LLP – Limited Liability Partnership
MVA – Mega Volt Ampere
MWp – Megawatts-peak
NBFC - Non-banking financial corporation
O&M -Operations and Maintenance
PGCIL – Power Grid Corporation of India Ltd.
PGInvIT – Power Grid InvIT
PLF – Plant Load Factor
PPA – Power Purchase Agreement
PV FCF – Present value of free cash flow
QIB – Qualified Institutional Buyer
RBI – Reserve Bank of India
CONTENTS
A. FOREWORD 1
B. INTRODUCTION 2
i. Renewables in India – history and growth 2
ii. Financing future renewables growth 7
iii. Market potential for InvITs in the Indian renewable sector 9
C. WHAT ARE InvITs? 12
i. Structure of InvITs 12
ii. Where do we stand – InvITs in India 15
iii. Benefits of InvITs for the renewable sector 21
Iv. Major limitations/challenges of InvITs for renewable sector in India 24
V. Case studies of power sector InvITs 24
D. STRUCTURING OF InvITs 33
i Steps to setting up an InvIT 33
Ii. Major considerations – setting up of InvIT 34
iii. Major risks and mitigation 42
E. THE WAY FORWARD 45
I. Considerations for proposed InvIT structures in the renewable sector 45
Ii. Findings and recommendations 47
F. ANNEXURE I – COMPARATIVE ANALYSIS OF NEW AND INNOVATIVE FINANCING INSTRUMENTS 49
G. ANNEXURE II – LEGAL & REGULATORY FRAMEWORK OF InvITs 51
I. Laws and regulations governing InvITs 51
Ii. Intermediaries and parties of InvITs - sponsor, trustee, investment manager, project manager, valuer, auditor 53
Iii. Requirements – eligibility, subscription limits 53
Iv. Debt and borrowing – securities and limits 57
V. Listing and private placement – process, requirements, restrictions 58
Vi. Transaction documents – SEBI requirements, transaction agreements 60
Vii. Investors and their roles – institutional, anchor and retail 61
Viii. Disclosure requirements 62
Ix. Corporate actions 63
X. Distribution requirements 63
Xi. Types of unit offerings 64
H. ANNEXURE III – VALUATION APPROACH FOR InvIT 65
I. ANNEXURE IV – OFFER DETAILS FOR PUBLIC LISTED InvITs 68
J. ANNEXURE V – CONSULTANT REFERENCES 70
K. ANNEXURE VI – REFERENCES 71
TABLES
TABLE 1. INVITS REGISTERED IN INDIA (APRIL 2022) 18
TABLE 2. DETAILS OF MAJOR INVITS IN INDIA (OCT’2021) 19
TABLE 3. PUBLIC-LISTED INVITS IN INDIA 20
TABLE 4. HISTORICAL PERFORMANCE OF PUBLIC-LISTED INVITS (CUMULATIVE RETURNS) 21
TABLE 5. VALUATION DIFFERENCES BETWEEN INVITS AND OTHER TRANSACTIONS 36
TABLE 6. MAJOR RISKS AND MITIGATION IN RELATION TO INVITS 42
TABLE 7. SEBI INVIT REGULATIONS AND SUBSEQUENT AMENDMENTS 52
TABLE 8. INVIT REQUIREMENTS 53
TABLE 9. ASSUMPTIONS FOR VALUATION 65
TABLE 10. FINANCIAL PROJECTIONS FOR 25 YEARS 66
TABLE 11. DETAILS OF INDIGRID INVIT 68
TABLE 12. DETAILS OF PGCIL INVIT 68
TABLE 13. DETAILS OF VIRESCENT INVIT 69

FIGURES
FIGURE 1 : RE SECTOR IN INDIA OVER THE YEARS 4
FIGURE 2 : FINANCING OPTIONS FOR RE SECTOR 7
FIGURE 3 : INDIA'S RE JOURNEY GOING INTO THE FUTURE -2030 8
FIGURE 4 : PROMINENT PLAYERS IN INDIAN RE SPACE 11
FIGURE 5 : STRUCTURE OF AN INVIT 12
FIGURE 6 : CASH FLOW MOVEMENT IN INVIT STRUCTURE 14
FIGURE 7 : INVITS – ASSETS UNDER MANAGEMENT OVER THE YEARS 19
FIGURE 8 : HISTORICAL PRICE MOVEMENT OF PUBLIC-LISTED INVITS 20
FIGURE 9 : STRUCTURE OF INDIGRID INVIT 25
FIGURE 10 : KEY INDIGRID DEVELOPMENTS OVER LAST 2-3 YEARS 26
FIGURE 11: RETURNS TO INDIGRID INVESTORS 27
FIGURE 12 : POWERGRID INVIT STRUCTURE 28
FIGURE 13 : STRUCTURE OF VIRESCENT INVIT 30
FIGURE 14 : INVIT ASSETS IN POWER SECTOR IN INDIA 31
FIGURE 15: STEPS INVOLVED IN SETTING UP AN INVIT 33
FIGURE 16: TYPE OF LISTINGS OF INVIT 37
FIGURE 17: TYPE OF TARGET INVESTORS 39
FIGURE 18: KEY ASPECTS FOR RATING DEBT IN INVITS 41
FIGURE 19 : LISTING OF PUBLIC INVITS 58
FIGURE 20 : PRIVATE PLACEMENT OF INVITS 59
A FOREWORD

Over the last decade, India has become the world’s third-largest producer and consumer of electricity. In addition,
India now holds the distinction of having the fourth largest installed capacity of renewable energy (RE) in the
world, a testimony to India’s commitment to sustainable development. India’s efforts were recently underscored
when the country achieved its nationally determined contribution target for 2030— 40 percent clean energy
capacity of the total installed capacity--eight years ahead of schedule.

At the United Nations Climate Change Conference (COP26) in November 2021, Prime Minister Modi further
accelerated India’s forward march towards decarbonization and net-zero emissions when he announced enhanced
climate targets— such as installing a non-fossil fuel electricity capacity of 500 GW, sourcing half of all energy
requirements from non-thermal sources by 2030, and hastening plans to reach net-zero by 2070.

Developing new renewable energy capacity and reaching these important targets are important for India and for
the world, but will require investments of more than $500 billion in the RE sector. The challenges are significant,
but India continues to make progress. In 2022, despite the pandemic, investments in RE are expected to reach
more than $15 billion.

The U.S.-India Climate and Clean Energy Agenda 2030 Partnership drives the deployment of clean energy
technologies and mobilizes finance for climate action. A combination of conventional and new financing
instruments is required to mobilize capital for India’s ambitious clean energy targets. Infrastructure Investment
Trusts (InvITs) are one such financing instrument that could contribute significantly toward meeting the RE sector’s
investment needs.

This handbook, developed by USAID’s South Asia Regional Energy Partnership (SAREP) in collaboration with
India’s Ministry of New and Renewable Energy, is intended to provide the necessary information on InvITs to
decision-makers as well as address information gaps, ultimately encouraging developers and investors to use InvITs
in raising the capital needed to fund clean energy plans.

I hope readers will find this handbook to be a useful resource in advancing the financing and deployment of
renewable energy in South Asia.

John Smith-Sreen

Director, Indo Pacific Office

United States Agency for International Development

01 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

B INTRODUCTION
A transition to clean energy is about making an investment in our future.

- Gloria Reuben
Infrastructure in India has historically been inadequate relative to the country’s large population. After
liberalization reforms, India witnessed a sudden rise in its overall economic growth – ranging from 7%-9% in the
latter half of the 1990s. Foreign investors started considering India a favorable investment destination (especially
in the services sector). To maintain this momentum, it was necessary for India to identify feasible ways to
encourage rapid, large-scale infrastructure development. Recognizing this, the Government of India (GOI) enacted
public-private partnerships (PPPs) to attract capital from the private sector. A robust set of measures followed,
involving transparent bidding procedures, standardized bid documents, and government grants/termination
guarantees to facilitate debt raises.

The result, over the short term, was excellent. Commercial banks started lending to the infrastructure sector,
private equity players started taking equity exposure, and developers started bidding for multiple projects.
However, several infrastructure projects were impacted by the global meltdown of 2008. Promoter and investor
equity capital could not be monetized, and asset liability mismatches emerged as a major issue with banks. The
underdeveloped bond market added to these woes, and funding avenues were constricted.

By 2012 – 2013, the GOI started evaluating options for the optimal route and instrument to attract long-term,
high-value private capital into the infrastructure sector. After several deliberations among various regulatory
authorities, the Securities and Exchange Board of India (SEBI) rolled out the InvIT regime in 2014. Infrastructure
Investment Trusts (InvITs) are popular vehicles for long-term infrastructure funding globally, with over 400 listings
of similar instruments accounting for ~USD 1.5 trillion of market capitalization (GriHub, 2020). In India, SEBI
facilitated InvITs through relevant regulations in 2014, thus allowing the creation and listing of trusts that had
proved successful in developed markets. Since then, InvITs have been registered across infrastructure assets like
roads, power transmission facilities, telecom towers, and gas pipelines. InvITs are likely to gain significant traction
over the next few years, and have the potential to channel significant long-term capital (such as pension and
insurance funds) into the Indian infrastructure sector.

I. RENEWABLES IN INDIA – HISTORY AND GROWTH

South Asia is one of the fastest-growing regions in the world, projected to require USD 6.35 trillion (INR 476
trillion) (UNESCAP, 2019) worth of infrastructure investments through 2030 (UNESCAP, 2019). India is one of
the major countries in South Asia, and a considerable portion of this investment is expected to occur in India. The
Government of India (GOI) in its quest to make the country, a USD 5 trillion economy by 2025, has also
announced the Gatishakti Plan, which envisages an investment of USD 1.5 trillion (INR 113 trillion) in
infrastructure by 2024-25, (Invest India, 2021). Such rapid economic development will mean a significant increase
in energy consumption, which necessitates significant new capacity additions. South Asia needs to transition to
modern and clean energy sources, given the forecast for burgeoning energy demand in the near future and the
region’s vulnerability to climate change.

India, in its commitment to global climate issues and sustainable development, pledged to install 500 GW of
non-fossil capacity by 2030 at the COP26 Climate Summit, held in Glasgow in November 2021. To achieve this
goal, India will need to add 25 to 35 GW of such capacity every year (FY2021 to FY 2030), compared with average
annual capacity deployment of 8-10 GW achieved over the past 5-7 years. This will require an investment of more than
USD 500 billion (INR 37.5 trillion) over the next eight years. Of this, approximately USD 300 billion (INR 22.5
trillion) would go toward RE capacity, USD 50 billion (INR 3.75 trillion) toward firming the grid, and USD 150
billion (INR 11.3 trillion) toward expanding and modernizing grid infrastructure (Buckley, 2021).

02 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

B INTRODUCTION

While the current policy framework has allowed India to reach the 100 GW RE capacity mark, the new targets for
2030 need further reinforcement of that support, especially in terms of capital deployment. Refining public-private
partnership (PPP) policies, building institutional capacity, lowering costs of capital, encouraging novel financing
instruments and frameworks, and developing new business models can help create the investment climate
required to achieve India’s green goals.

Though the amount of growth and investments needed in the RE sector till 2030 appears ambitious, India’s
renewables' sector has taken rapid strides over the last decade, adding almost 90 GW of RE capacity between
2010 and 2021. As of 2020, India was the fourth-ranked country globally in wind power, fifth in solar power, and
fourth in RE installed capacity. However, this success has not come overnight, and GOI through Ministry of New
and Renewable Energy (MNRE) has been providing a conducive policy and regulatory framework to enable
growth in renewable energy.

With a dedicated ministry (MNRE) supervising RE growth, and with definitive targets in sight, India’s capacity
addition started picking up pace, post 2012. To honor its international commitment to a green and climate-friendly
growth trajectory, the GOI made a path-breaking decision in 2015, announcing an ambitious target of 175 GW of
RE capacity by 2022. Moving ahead, the Hon. Prime Minister of India, during the Climate Change Summit held at
Glasgow, announced India’s commitment to become a net-zero economy by 2070. In addition, to reaching 500
GW non fossil fuel capacity by 2030, reducing the economy's carbon intensity to less than 45%, was also one of
the major commitments announced during Glasgow summit. The commitments announced shall require an orbital
shift in the RE capacity addition and capital requirements.

A visual depiction of the growth in the Indian RE sector (from 2010 to 2021), capacity additions (GW), tariff
trajectory (INR per unit) and quantum of investments and fiscal/policy incentives provided by GOI is shown in
Figure 1

03| AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

B INTRODUCTION
FIGURE 1 : RE SECTOR IN INDIA OVER THE YEARS

04 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

B INTRODUCTION

As may be seen in the above figure, the GOI has launched multiple fiscal/policy incentives over the past decade,
including accelerated depreciation, generation-based incentives, tax holidays, viability gap funding, and soft loans
from the IREDA to encourage private players to enter the RE sector in the initial stages. However, as the sector
matured, these incentives were gradually replaced by commercial lending in various forms of debt, equity and
mezzanine finance, as can be seen from the growth of investments starting FY 2015-16 (the year in which RE was
mandated as part of the priority sector lending of banks). Investments grew almost five-fold in the period
2015-2021. Further, the compound annual growth rate of capacity addition (GW) has exceeded 20 percent over
the last decade, and tariffs have fallen to current levels of INR 2 per unit from INR 17 per unit (20 cents per unit)
in 2011.

Even though the RE sector has grown exponentially since 2010, solar and wind capacity additions slowed down
towards the end of the decade, however, there has been a revival with the RE capacity addition of 13.5 GW being
achieved in FY 21-22. Solar capacity addition decreased by about 30 percent from 2018-19 (6.53 GW), and about
15 percent from 2020-21 (5.46 GW). There has been a similar trend in the wind power sector, with a decrease of
68 percent from 2017-18 (1.77 GW) to 11 percent from 2018-19 (1.58 GW), rising marginally to 29 percent from
2019-20 (2.04 GW) and decreasing again by 22 percent from 2020-21(1.60 GW). Several internal and external
factors impacted the growth like rupee depreciation, lower tariffs etc, thereby affecting investor sentiment and
thus contributing to the sluggish growth in the RE sector. Coupled with the nature of India’s financial
markets—characterized by high capital costs and lack of adequate debt financing—this presents greater financing
challenges for the sector (ORF, 2020).

05 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

B INTRODUCTION
In the past, India’s RE sector has raised funds from multiple sources, including strategic equity investors,
commercial banks, NBFCs, development financial institutions (DFIs), and private equity investors. The outstanding
debt exposure to the power sector by Indian banks and NBFCs totaled approximately USD 168 billion (INR 12.6
trillion) as of March 2020 (CEEW, 2021). To put this in perspective, the estimated debt requirement at 3:1
leverage will amount to USD 375 billion (INR 28.1 trillion), more than twice the current outstanding debt
exposure of banks to the power sector. The equity requirement is expected to be around USD 125 billion (INR
9.4 trillion), about 80 percent more than the USD 70 billion (INR 5.2 trillion) investment in the RE sector since
2014 (Singh, R.K., 2021). To successfully achieve the 2030 target of 500 GW of installed non-fossil capacity,
developers must mobilize an unprecedented amount of funds over the next 8-10 years, necessitating the use of
innovative financing instruments both for debt and equity.

06 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

B INTRODUCTION
II. FINANCING FUTURE RENEWABLES GROWTH
When raising debt, RE project developers can raise capital from international USD-denominated markets or
domestic INR-denominated markets. Additionally, capital can be raised in either denomination from institutions or
debt capital (bond) markets. Similarly, equity can be raised from private equity investors, IPO, InvITs etc.
A figure highlighting the financing options are depicted in Figure 2 below:
FIGURE 2 : FINANCING OPTIONS FOR RE SECTOR

Source of capital Domestic (INR) International (USD)

Institutional Debt Major Source Few transactions

Emerging trend
Bonds (Including Green Untapped. Markets not
Bonds) deep enough Fast emerging: 21 bond
issuances of USD 11.2 billion
IPO Very few Few transactions

Private Equity Major Source Major Source

InvIT/Yieldcos Untapped Untapped

Institutional domestic debt has been the predominant source of funds for the Indian RE sector in the past whereas
institutional debt from international entities is dominated by lending from multilateral and sovereign development
banks. However, in recent years, alternate sources of funds are emerging, as seen in the case of a recent
transaction involving debt raised in USD terms from a consortium of private international lenders. Raising debt
through bond markets, particularly through the issue of ‘green bonds’, has been a growing source of funds.
Domestic bond markets have remained untapped by private RE developers so far whereas international bond
markets have shown significant interest in Indian green bond offerings (CEEW 2021). From an equity perspective,
RE developers, previously, have heavily relied on private equity transactions coupled with a few public issues like
SPAC, listing in international markets.

The current policy framework has allowed India to reach the 100 GW RE capacity mark; however, the envisaged
targets for 2030 require further reinforcement, especially in terms of capital deployment. There is a need to
identify and implement new financing solutions (apart from traditional debt and equity sources) and to develop
instruments that will enable the significant scale up of RE financing.

During COP26, India committed to reach non-fossil capacity addition of 500 GW by 2030. Out of this 500 GW
capacity, it is estimated that 425 – 450 GW capacity shall be contributed by renewable energy (sub-sector wise
breakup provided in figure 3 below) (Bishnoi, 2021) and another 70-80 GW shall come from large hydro (Sharma
2022). Further, to reach the targets pledged at the COP26 Glasgow conference, India requires significant
investment, primarily towards capacity addition of solar and wind projects, as shown in Figure 3 below. This will
entail the addition of nearly 28 GW of solar and 12 GW of wind capacity annually, which in turn would require
cumulative investment to the tune of USD 163 billion (INR 12.1 trillion) that would entail debt financing in the
range of USD 121 billion (INR 9.1 trillion) and USD 41 billion (INR 3 trillion) of equity. Indian banks have limited
ability to ramp up lending for the RE sector, considering the high levels of current debt exposure to the power
sector [USD 168 billion (INR 12.6 trillion)]. Traditional means of financing, both debt and equity, appear
inadequate to meet this huge financing requirement. Hence, new and innovative financing instruments must be
evaluated and adopted. Some of such new innovative financing instruments that can be utilised to bridge the
funding cap are Infrastructure investment trusts (InvITs), green bonds and Alternative Investment Funds (AIFs). A
comparative of these instruments is enclosed at Annexure I.

07 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

B INTRODUCTION
FIGURE 3 : INDIA'S RE JOURNEY GOING INTO THE FUTURE -2030

Debt : USD
121 Bn (INR
9.1 Trillion)
Equity : USD
41 Bn (INR
3 Trillion)

Total Quantum : USD 163 Bn

(INR 12.1 Trillion)

450 GW

500
345 GW
450
15 30
RE installed capacity in GW

400
100
350 140
300
250
200 105 GW
230
150
280
100 15
50 40
50
0
March 31, 2021 2022-2030 (Expected Addi�ons) 2030
Solar Wind Other sources (biomass, small hydro)

InvITs are one such financing instrument. InvITs facilitate the recycling of capital over short intervals and enable
subsequent reinvestment in new/greenfield projects, thus accelerating the transition to clean energy. RE projects
require high amounts of capital expenditure, with returns on these projects generated over long periods of time (15-20
years). For this reason, investments made by RE developers are tied up,limiting cash reserves to invest in new projects.
To undertake fresh capital expenditure and build new assets, RE developers may need to resort to external borrowing
(at the corporate level) or asset monetization (sale of existing assets). InvITs unlock the true value of existing operational
assets and help remove funding limits and increase equity for RE developers, which can be reinvested. InvITs also
facilitate the raising of long-term capital for RE projects, by tapping a different class of investors--pension funds, insurance
companies and sovereign wealth funds--that tend to have longer investment horizons and prefer stable yields with safe
investment opportunities.

In the past, banks or public funds have been the major sources of finance for RE projects. However, for greenfield RE
projects, developers are faced with multiple demands from financial institutions, such as upfront security creation,
stringent lending terms, corporate guarantees, negative liens on shares, etc., in addition to the issues posed by
asset-liability mismatches. This is where InvITs provide true ease of funding and can become a game changer for the RE
sector in India.

08 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

B INTRODUCTION
III. MARKET POTENTIAL OF InvITs IN THE INDIAN
RENEWABLE SECTOR

The operating framework behind InvITs and Real Estate Investment Trusts (known as REITs, which have a
structure similar to InvITs, but are used in real estate sector) builds on the experience of similar instruments
(YieldCos, master limited partnerships, business trusts, etc.) that have existed for many decades in developed
financial markets like the US, UK, Australia, Singapore, and Hong Kong (Shah, Harsh 2018). There have been
about 70 listings of similar platforms in neighboring countries like Singapore, Hong Kong, and Malaysia, where
these platforms have been prevalent for the last 10-15 years (IndiGrid, 2021). Globally, the share of REITs in
overall real estate market-cap is quite significant. In 2019, the market cap of US REITs was 96 percent of the total
real-estate market cap, while in Singapore, Japan, and Malaysia it was 55 percent, 51 percent and 42 percent,
respectively (Sanghai , Sunil 2020). Investors in India must be encouraged to exercise the InvIT option, as
evidenced by the fact that Indian InvITs constitute only 0.7 percent of the market-cap-to-GDP ratio, compared to
20 percent in Singapore and 7 percent in Hong Kong.

Globally, there are over 400 listings of similar instruments accounting for ~USD 1.5 trillion (INR 112.5 Tn) of
market capitalization (GriHub, 2020). These instruments have helped countries meet their capital needs for the
infrastructure and real-estate sectors. Long-term infrastructure assets like roads, power- generation facilities,
telecom towers, power transmission infrastructure, warehouses, ports, gas pipelines, etc. are owned by such
investment platforms, which offer investors stable income and growth over the long term. They are
high-dividend-paying investments suitable for investors seeking long-term, stable cash flow with moderate capital
appreciation.

InvITs have been more actively used in India over the last 3-4 years, especially after initial issuances stabilized and
more clarity emerged on the policy and regulatory framework. InvITs have a clear advantage, as they allow access
to a pool of long-term patient investors with a lower return threshold compared to conventional forms of
financing. The GOI has been proactive in passing required amendments to the overall policy structure to increase
interest from investors. In short, InvITs have the potential to become the new normal for RE financing and can
channel significant long-term capital (such as pension and insurance funds) and domestic savings into the Indian RE
sector. As per CRISIL estimates, InvITs can raise more than USD 100 Bn (INR 7.5 Tn) over the next 5-6 years,
about four times current assets under management (AUM).

The section of this handbook, Case Studies of Power Sector InvITs, demonstrates that there is keen interest amongst
both Indian and global investors for investing in RE assets. India in the past has seen many large investors, including
pension funds, insurance funds, sovereign funds, DFIs and private equity firms, investing heavily in the RE market. Some
key investors active in the Indian RE space include KKR, Caisse de dépôt et placement du Québec (CDPQ), Canada
Pension Plan Investment Board (CPPIB), Temasek Holdings, World Bank’s International Finance Corp, Goldman Sachs,
Brookfield, SoftBank, JERA Co. Inc., GIC Holdings Pte Ltd, Global Infrastructure Partners, Commonwealth
Development Corporation (CDC) Group Plc, EverSource Capital, Reliance Nippon Life Insurance Company, and
Copthall Mauritius Investment.

With their current portfolios and future investment plans, it is estimated that such global investors have the appetite to
invest anywhere between USD 100 million (INR 7.5 billion) to USD 500 million (INR 37.5 billion) through a single
transaction, and act as anchor investors, provided other requirements such as taxation and transaction structure are
aligned with their investment policies.

09 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

B INTRODUCTION

Potential contenders for InvITs in Indian RE sector

Assuming a conservative investment of USD 100 milllion (INR 7.5 billion) by a single investor, which may act as the
anchor investor (constituting maximum 25 percent of allowed investment limits by single investor), the total equity
capital base for an InvIT works out to be USD 400 million (INR 30 billion) and with a leverage of around 50
percent, the minimum scale of investment for a RE InvIT is expected to be around USD 800 million (INR 60
billion) at the time of issuance. If the anchor investor is large, asset portfolio investments can easily double one to
two years post-issuance.

Considering an initial investment of USD 800 million (INR 60 billion), key players in the Indian RE sector are
evaluated (see Figure 4 below). The analysis suggests that at least eight RE developers fulfil the criteria of
operational portfolios of USD 800 million (INR 60 billion) or more, and have elaborate future investment plans.

10 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

B INTRODUCTION
FIGURE 4 : PROMINENT PLAYERS IN INDIAN RE SPACE - OPERATIONAL
CAPACITY AND INVESTMENTS

India's RE sector (Jan'2022)

Tata Power Acme

2.95 GW 2.9 GW
(USD 1.39 (USD 1.36
Bn) Bn)

Sembcorp Renew Power

Greenko 1.7 GW Avaada
7 GW
7.3 GW
(USD 800 (USD 3.3 Bn)
(USD 3.4 Bn)
Mn)

Hero
Future
NTPC
2.1 GW
(USD 983
Mn)
Adani Green
JSW 5.4 GW
Azure
(USD 2.5 Bn)
2.3 GW
(USD 1.08
Bn) Ayana

Others

Note : Figures above indicate the operational capacity of key RE players alongwith the worth of project assets which are operational (in brackets)
[assuming 1 MW of RE asset = USD 0.47 Mn (INR 35 Mn) – USAID SAREP analysis]

Tata Power, Acme, Renew Power, Adani Green, Azure, National Thermal Power Corp. Ltd. (NTPC), Sembcorp
and Greenko are the developers that can explore InvITs as a financing instrument. The cumulative operational RE
asset portfolio of these entities (in India) is to the tune of USD 15 billion (INR 1.1 trillion). This asset portfolio can
be financed using InvITs, and this market size is expected to increase exponentially in the coming years, considering
the envisaged growth in RE through 2030.

11 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

C WHAT ARE InvITs?
The value of an idea lies in the using of it.

- Thomas Edison

An InvIT is a form of a pooled investment vehicle, like a mutual fund in which an individual and or institution buy
units. It is a way of pooling funds to invest in an asset. InvITs are designed to offer a more stable and liquid financial
instrument to invest in infrastructure. It resembles a hybrid of debt and equity i.e., structured to provide low-risk
regular cash flows, similar to debt and at the same time providing an upside potential (investment appreciation),
similar to that of equity by being a tradable instrument subject to price fluctuations. InvITs are used by
infrastructure asset owners to pool money from diverse sets of investors against cash flow generated by assets,
on a periodic basis.

I. STRUCTURE OF InvITs

The typical structure of an InvIT is depicted below, in Figure 5. Under an InvIT transaction, infrastructure asset
owners transfer multiple revenue-generating asset SPVs through a holding company (or otherwise) to a trust,
which then issues units to investors to raise capital. The upfront capital raised is used by developers for funding
the equity portion of the new greenfield assets and repay existing debt, thereby providing an option of raising
additional leverage from lenders for new projects. Investors, in lieu of invested capital, receive a share of net
distributable cash flow (NDCF), similar to dividend payouts, on a periodic basis, commensurate with their unit
holdings in the trust. Improved yields for unit holders can be ensured by adding revenue-generating projects and
expanding portfolios.

FIGURE 5. STRUCTURE OF AN InvIT

Source: SEBI (2014), USAID SAREP analysis

12 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

C WHAT ARE InvITs?
In an InvIT, the asset owner (“sponsor”) creates an independent trust and transfers the ownership/rights of the
public assets to the trust. Investors (“unit holders”) are the beneficiaries of the trust. A unit of InvIT represents
part ownership of the infrastructure assets held by the infrastructure trust. This entitles the unit holder to receive
a share of the income generated by the InvIT from its infrastructure holdings.

Typically, InvITs are set up under the Indian Trusts Act, 1882 and registered with SEBI under the InvIT regulations,
2014. The major entities involved in InvITs are as follows:

a) Sponsor – An entity (corporate body, LLP, promoter, or company) that is the settlor and author of
the trust and is designated as the sponsor of the InvIT at the time of application to SEBI. The
sponsor is responsible for setting up InvIT including transferring the initial portfolio of assets.
There can be multiple sponsors; each sponsor must have a net worth or net tangible assets (in the
case of LLP) of not less than USD 13.5 Mn (INR 1 Bn). Further, the sponsor and its associates must
have a sound track record (e.g., at least five years’ experience when the sponsor is a developer, with
at least two completed projects) in the development of infrastructure or in fund management for the
infrastructure sector. The sponsor must:

1. Hold atleast 15 percent of the total units in an InvIT, with a minimum lock-in period of three years.
2. Have a track record in the development of infrastructure or in fund management for the
infrastructure sector
3. Transfer its shareholdings in SPVs/assets to the InvIT
4. Appoint the InvIT trustee and investment manager

b) Trustee – An entity that holds InvIT assets in trust for the benefit of unit holders, in accordance
with SEBI regulations. The trustee should be registered as per SEBI (Debenture Trustees)
Regulations, 1998, and should not be an associate of the sponsor(s) or investment manager. Further,
the trustee must have the necessary resources with respect to infrastructure, personnel, etc., to the
satisfaction of SEBI. The trustee:

1. Appoints and oversees the activities of the investment manager and project manager,
ensuring compliance with SEBI InvIT regulations
2. Enters into agreements on behalf of the InvIT
3. Declares distributions by the InvIT
4. Reviews any investor complaints
5. Holds InvIT assets in trust for the benefit of unit holders
6. Ensures that business activities and investment policies comply with regulations

c) Investment Manager (IM) – The IM manages the assets and investments of the InvIT and undertakes
various InvIT activities as specified by SEBI regulations. The IM must have a net worth of not
less than USD 1.35 Mn (INR 100 Mn) and at least five years’ experience in fund management or
advisory services or development in the infrastructure real estate sector. The IM should ensure
that at least half of the directors (in case of a company) or half of the members of the governing board
(in case of an LLP) are independent, and that such directors or governing board members should not
be part of the IM of another InvIT. The IM should have an office in India, where operations pertaining
to the InvIT are conducted. As the corporate body of an LLP, an IM supervises all InvIT operational
activities, including investment decisions. The IM:

1. Sets the strategic direction of the InvIT and decides on the acquisition, divestment, or
enhancement of assets
2. Is responsible for all activities related to the issuing and listing of units
3. Decides distributions to unit holders

13 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

C WHAT ARE InvITs?
4. Provides disclosures to various stakeholders, as per regulations
5. Redresses grievances of unit holders

d) Project Manager - Designated by the InvIT, this entity is responsible for the execution and
management of the project. Under SEBI regulations, the project manager must be the sponsor or
an associate of the sponsor for a period of three years from the date of listing of InvIT units, unless
a replacement is appointed by unit holders through the trustee. The project manager is mostly
responsible for executing projects, but also has ancillary responsibilities (in the case of PPPs). The
project manager is responsible for:

1. Day-to-day operations and management of assets held by the InvIT

2. Discharging obligations for timely completion of the infrastructure project

FIGURE 6 : CASH FLOW MOVEMENT IN InvIT STRUCTURE

1 5
InvIT raises funds from: InvIT distributes at least 90% of its net
1. Investors (Unit holders) Sponsor & distributable cash flows (i.e., cash
2. Lenders (no external debt received by it from the SPV less InvIT
contemplated at this juncture)
Investors expenses) to unit holders in the
following forms:
1. Interest
2. Dividend
3. Repayment of principal

2
With the money raised, InvIT:
1. Pays sponsor a consideration for InvIT
trasnsferring projects to InvIT
2. Extends loan to SPVs

4
SPV distributes at least 90% of its net
3 distributable cash flows to the InvIT in
With the loan amount received following forms:
from InvIT, SPV: 1. Interest on InvIT loan
SPV 2. Dividend
1. Repays its existing lenders
3. Repayent of principal on InvIT loan

14 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

C WHAT ARE InvITs?
II. WHERE DO WE STAND – InvITs IN INDIA

The GOI launched InvITs and REITs to enhance long-term yield capital and increase private investments in
infrastructure and real estate. SEBI issued the first regulations pertaining to InvITs in 2014, followed by subsequent
amendments. REITs and InvITs together have raised capital of over USD 4 Bn (INR 0.3 Tn) in India, and the
combined market cap of listed REITs and InvITs in India is over USD 7 Bn (INR 0.5 Tn) for REITs and over USD 10
Bn (INR 0.7 Tn) for InvITs (Karnik, 2021). With the GOI’s National Infrastructure Pipeline funding requirement of
over USD 1.4 trillion (INR 105 Tn) by 2025 (Karnik, 2021), REITs and InvITs are expected to be the dominant
mode of fundraising.

In addition, InvITs have been identified by Niti Aayog (the apex public policy think tank of GOI) as one of the
major instruments under the National Monetization pipeline (Niti Aayog, 2021), and government entities like
Power Grid Corporation of India Limited (PGCIL) and National Highways Authority of India (NHAI) have issued
InvITs, clearly demonstrating the attractiveness of the instrument.

So far in India, 15 InvITs have been registered with SEBI, with assets under management of more than USD 18.8
Bn (INR 1.4 trillion) (till 2021). These InvITs are in the transport, power transmission, telecom, and renewables
sectors, with initial issue sizes varying from USD 61.7 Mn (INR 4.60 Bn) to USD 1.97 Bn (INR 147 Bn). Only one
InvIT with an issue size of USD 61.7 Mn (INR 4.60 Bn) has been registered in the renewables sector, which
accounts for less than 0.5 percent of the funds raised through InvITs in India.

HISTORY OF InvITs

A brief on the journey of InvITs in India is mentioned below:

a) Early steps - In 2013, the GOI wished to devise a mechanism to attract long-term foreign
capital to the Indian infrastructure sector. Three important parameters were identified: tax-optimal
regular distributions, diversified risk portfolios, and a well-regulated and transparent investment
platform. Accordingly, SEBI conceptualized InvITs. A consultation paper was released in late 2013,
and consequently the SEBI InvIT Regulations were enacted in 2014.

b) Launch and initial response - While InvITs were expected to significantly contribute to
infrastructure development, by enabling capital recycling (sale of operational and revenue-generating
assets to raise funds, which can be reinvested in greenfield assets), the initial respons was lukewarm.
The first two InvITs – IRB InvIT Fund and Indigrid – were both publicly listed. Within a few days of
launch, both InvITs started trading at a discount, and by 2017 the discount was considerable. Two
major factors were identified for this lack of success: a valuation mismatch between investors and
developers, and the inappropriate positioning of InvITs as classic equity products. By 2018-19, the
debt levels of developers increased significantly, thereby moderating valuations. In addition, the
categorization of the investor base was further fine-tuned, to attract pension and sovereign funds
who could remain invested for long periods with comparatively lower expected returns.

c) Resurgence - By early 2018, multiple sponsors like IRB, Sterlite, Reliance, and Oriental started
negotiating with large investors due to a deluge of reforms including a separate categorization of
the investor base for pension and sovereign funds, revisiting of the InvIT framework by SEBI and RBI,
allowance of higher leverage (from 49 percent to 70 percent, in line with the industry standard),
domestic debt financing from banks, offshore leverage from FPIs, and extension of the tax benefits
of unlisted InvITs, (Sinha, 2020).

15 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

C WHAT ARE InvITs?

KEY FEATURES OF InvITs

The key laws applicable to InvITs include InvIT Regulations notified by SEBI and subsequent amendments,
Preferential Issue Guidelines, Allotment and Trading Lot Guidelines, Trusts Act, Registration Act, Income Tax Act
1961, Foreign Exchange Management Act (FEMA)1999, and FEMA Regulations. Some of the major features of
InvITs include:

a) Investment in operational assets: At least 80 percent of an InvIT investment is in operational and

revenue-generating assets. The remaining 20 percent of assets can be in under-construction
infrastructure projects and various SEBI-approved equity, debt, and money-market instruments.
Owing to 80 percent investment in revenue-generating assets, InvITs offer ‘low-risk’ cash flow from
high -quality assets.

b) Cash flow distribution: Regulations mandate that 90 percent of net distributable cash flow is
distributed to unit investors. The dividend is distributed at least twice in a year (in case of publicly
listed InvITs) and once a year (in case of privately placed InvITs), thereby providing a regular stream
of cash flows to investors.

c) Sponsor restrictions: The sponsor should hold a minimum of 15 percent of units issued by the InvIT,
with a lock-in period of three years from the date of issuance. This ensures that there are suitable
safeguards in place for other unit holders and, hence, the risk is minimized.

d) Permissible unit holdings: The maximum unit holdings limit for an investor in an InvIT is 25
percent. However, this restriction is not applicable to sponsors and their related parties and
associates.

e) Mode of InvIT issuance: Value unlocking under InvITs occurs in two modes:

1. Public-listed InvITs: After an infrastructure trust lists itself on the stock exchange, it is known
as a public-listed InvIT. Units of a public-listed InvIT can be bought and sold on stock
exchanges, by retail as well as institutional investors. Public InvITs are required to list units
within three years of SEBI registration

2. Privately held InvITs: These InvITs can be listed or unlisted; all units are held privately by a
limited number of individuals or institutions.

It may be noted that units of both Public and Private InvITs can be traded in respective markets,
which provides enough liquidity to investors. Further, as per regulations, Public InvITs are
required to list units within three years of SEBI registration. Alternatively, private unlisted InvITs
are also allowed

f) Minimum asset base : Total value of assets held by the InvIT should be greater than USD 67 Mn
(INR 5 Bn).

g) Long-term robust assets: InvITs have to ensure a credit rating of AAA prior to the launch, which
ensures only robust assets are housed within the structure. Further, the underlying assets have a long
concession period due to the inherent nature of infrastructure, hence providing a long-term clear
visibility of returns to investors.

16 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

C WHAT ARE InvITs?

h) Debt issuance : An InvIT listed on a stock exchange can issue debt securities. Public InvITs, along
with holding companies and SPVs, can have consolidated borrowing of up to 49 percent of asset
value. This can increase to 70 percent (subject to compliance with certain conditions).

i) Highly regulated structure: InvITs can only be launched when they are in compliance with
various regulations, which includes InvIT Regulations notified by SEBI and subsequent amendments,
Preferential Issue Guidelines, Allotment and Trading Lot Guidelines, Trusts Act, Registration Act,
Income Tax Act 1961, Foreign Exchange Management Act (FEMA)1999, and FEMA Regulations.

A detailed description of InvIT legal and regulatory requirements can be found in Annexure I:Legal & regulatory
framework of InvIT.

RECENT GOI AMENDMENTS TO InvIT FRAMEWORK

In addition, the GOI has been encouraging the use of InvITs as a financing instrument by creating a conducive
policy and regulatory framework. Some recent policy and regulatory changes include:

a) The Insurance Regulatory and Development Authority of India (IRDAI, 2021) through Circular No.
IRDAI/F&A/CIR/INV/098/04/2021 dated April 22, 2021, allows insurance companies to invest in
the debt securities of InvITs and REITs

b) Sponsor-rating requirements for investment by pension funds into InvITs were relaxed

c) RBI, as part of its monetary and credit information review meeting held on October 11, 2019,
permitted banks to lend to InvITs, subject to certain conditions (RBI, 2019)

d) On November 4, 2020, SEBI issued Guidelines (SEBI, 2020) for rights issues of units by unlisted
InvITs

e) An increase in the leverage limit from 49 percent to 70 percent, subject to conditions, as per
amendments issued by SEBI on April 22, 2019 (Bassi, 2019), makes InvITs more competitive and
provides better returns for unit holders

f ) An amendment to the Finance Act 2021 recognizes InvITs/REITs as securities, which enables debt
financing by foreign portfolio investors (FPIs) and issuance of debt securities, which are much
cheaper (Niti Aayog, 2021)

g) The Finance Bill, 2020 re-introduced the exemption to the dividend-distribution tax, coupled with
the income-tax exemption given to sovereign wealth funds and pension funds for investments
made in InvITs (KPMG, 2021)

h) Due to the trust structure of InvITs, dividends are not taxable at the trust level, but rather at the
level of unit holders. Dividend payments to REIT and InvIT are therefore exempt from Tax
Deduction at Source (TDS) (KPMG, 2021)

i) Exemption from stamp duty (ranging between 5–10 percent), for transfer of CPSE assets, when
conducted between government entities (Niti Aayog, 2021).

17 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

C j)
WHAT ARE InvITs?
Reconstruction or splitting up of a Public Sector Undertaking (PSU) into separate companies is
deemed to be a de-merger if the process involves a transfer of assets to the resulting public
sector company, and this de-merger is tax neutral (Niti Aayog, 2021)

k) SEBI revised the minimum application value to USD 134.5 (INR10,000)– USD 201.7 (INR 15,000),
and the trading lot to one unit, as per amendments issued on April 22, 2019

REGISTERED InvITs IN INDIA

Details of the 15 registered InvITs (SEBI, 2022) are shown in Table 1, below:

TABLE I. InvITs REGISTERED IN INDIA (April 2022)

SR. NO NAME OF InvIT SECTOR STATUS TYPE OF ISSUE

1 Digital Fiber Infrastructure Trust Telecom Active Private

2 IndiGrid Trust Power Active Public

3 India Infrastructure Trust Transport Active Private

4 Indian Highway Concessions Trust Transport Active Private

5 IndInfravit Trust Transport Active Private

6 IRB Infrastructure Trust Transport Active Private

7 IRB InvIT Fund Transport Active Public

8 Oriental InfraTrust Transport Active Private

9 Data Infrastructure Trust Telecom Active Private

10 Virescent Renewable Energy Trust Power Active Private

11 POWERGRID Infrastructure Investment Trust Power Active Public

12 National Highways Infra Trust Transport Active Private

13 Shrem InvIT Transport Active Private

14 Roadstar Infra Investment Trust Transport Not available Not available

15 MEP Infrastructure Investment Trust Transport Not available Not available

16 Highways Infrastructure Trust Transport Active Not available

Source: SEBI

Through 2021, cumulative investments of USD 18.82 Bn (INR 1.4 trillion) were made through InvITs, with a
CAGR of more than 100 percent over the last 4-5 years. Figure 6, below, shows the growth of annual assets under
maintenance (AUM) for InvITs:

18 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

C WHAT ARE InvITs?

FIGURE 7: InvITs – ASSETS UNDER MANAGEMENT OVER THE YEARS

AUM (in INR Bn)

1400

770

310
0 130

FY 15 FY 18 FY 19 FY 20 FY 21
Source: Shah, Harsh 2021

InvIT-wise details of the current AUM is shown in Table 2, below:

TABLE 2. DETAILS OF MAJOR InvITs IN INDIA (Oct’2021)

APPROX. AUM
NAME OF INVIT SPONSOR ASSET CLASS STRUCTURE THROUGH 2021
USD BN (INR BN)

IRB InvIT fund IRB Roads Public listed USD 0.98 Bn

(INR 73 Bn)

India Grid trust KKR Power transmission Public listed USD 2.82 Bn
(INR 210 Bn)

Indinfravit trust L&T IDPL Roads Private listed USD 1.41 Bn

(INR 105 Bn)

India Infrastructure Brookfield Gas pipeline Private listed USD 1.94 Bn

Trust (INR 145 Bn)

Oriental Oriental group Roads Private listed USD 1.47 Bn

Infrastructure (INR 110 Bn)

IRB Infrastructure IRB Roads Private USD 3.02 Bn

Trust unlisted (INR 225 Bn)

Tower Infrastructure Reliance Telecom towers Private listed USD 5.63 Bn

Trust Industries (INR 420 Bn)

Power Grid InvIT Power Grid Power transmission Public listed USD 1.34 Bn
(INR 100 Bn)

Virescent Renewable USD 0.32 Bn

KKR Renewables Private Listed
Energy Trust (INR 24 Bn)

Source: Shah, Harsh 2021

19 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

C PUBLIC InvITs
WHAT ARE InvITs?

Of the 15 InvITs currently registered in India, three are publicly listed, as shown in Table 3, below.

TABLE 3. PUBLIC-LISTED InvITs IN INDIA

PARTICULARS POWERGRID InvIT INDIGRID InvIT IRB InvIT

Issue date May 2021 May 2017 March 2017

Initial issue size USD 1.04 Bn USD 0.30 Bn USD 0.63 Bn

(INR 77.3 Bn) (INR 22.5 Bn) (INR 46.6 Bn)

Sterlite Power Grid IRB Infrastructure

Sponsor PGCIL
Ventures Developers Limited

Initial portfolio of Transmission lines and Transmission lines and

Roads
assets substations substations

Source: Investing.com

The historical price curves for these public-listed InvITs (post-IPO) are shown in Figure 8, below:

FIGURE 8 : HISTORICAL PRICE MOVEMENT OF PUBLIC-LISTED InvITs

+9.0%*

+33.0%*

-12.0%*

Source: BSE India, USAID SAREP analysis; *Annualized returns (CAGR)

20 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

C WHAT ARE InvITs?
It is quite evident from Figure 8 above, that except for one of the InvITs, the other two i.e. IndiGrid and PGInvIT
have rewarded investors with stable annual returns of 9 percent and 33 percent respectively with minimal risk
(exceeding the risk-free Indian Government securities bond yields in the range of 6.4 percent - 8.0 per cent during
the same period). With a limited history in terms of the number of InvITs and time-period visibility, it is premature
to conclude, but the performance from initial issues is encouraging and mostly positive for investors.

The historical cumulative returns of public-listed InvITs are shown in Table 4, below.

TABLE 4. HISTORICAL PERFORMANCE OF PUBLIC-LISTED InvITs (CUMULATIVE RETURNS)

InvIT SINCE IPO LAST 4 YEARS LAST 2 YEARS LAST TWELVE MONTHS
(LTM)

IRB InvIT -45.0% -37.3% -0.1% 14.3%

IndiGrid InvIT 46.0% 55.4% 52.2% 19.2%

POWERGRID InvIT 21.0% NA NA NA

III. BENEFITS OF InvITs FOR THE RENEWABLE SECTOR

As mentioned earlier, developing RE projects requires a significant amount of initial investment, which often takes
a longer time to recover. The payback period may be in the range of 8-10 years; however, because the priority is
debt servicing from project cash flow, recovery of equity is even further extended. This elongated recovery time
for equity investments hampers quick re-investment into greenfield RE projects and hampers the ambitious
growth targets for the RE sector by 2030. InvITs, as an alternative to conventional means of financing (both debt
and equity), should be considered as a way to bridge funding gaps in the RE sector. Some of the major benefits of
using InvITs as a financing instrument include:

For RE developers:

a) Access to a larger pool of capital: InvITs, through their product profiles, have the potential to attract serious,
long-term investors such as insurance companies, mutual funds, and pension funds like Canada Pension Plan
Investment Board (CPPIB), Caisse de dépôt et placement du Québec (CDPQ), LIC, Ontario Teachers’ Pension
Plan (OTPP), KKR, GIC etc. The stable and predictable cash flows associated with InvITs provide comfort to such
investors. Capital raised through InvITs can be re-invested in greenfield projects. The larger investor base
substantially enhances the probability of full subscription and, possibly, can result in better terms and conditions
from the investor’s perspective compared to conventional forms of financing (where investors do not have much
say if their share is under 26 percent). In addition, net cash flows must be distributed at least once every six
months for public-held InvITs, and at least once every year for privately held InvITs, thus providing regular income
to unit holders.

b) Constant flow of capital: RE projects qualify as infrastructure projects, per the Ministry of Finance, and are thus
eligible for InvITs. The investment pools facilitated by InvITs makes it easier for developers to commission assets

21 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

C WHAT ARE InvITs?
and transfer these to InvITs. InvITs, in turn, raise capital from multiple retail and institutional investors to fund these
considerations and buy off operational assets. RE project developers can then use this capital to pay off existing
debts, and the balance can be used as growth capital for re-investment in under-construction assets and greenfield
investments. Once the InvIT is notified and investors are onboarded, the RE developer can transfer assets to the
InvIT (in a shorter timeframe), thereby considerably reducing the time and effort spent in fructifying M&A deals for
operational assets. This also provides continuous cash generation for RE developers when assets are transferred.

c) Higher Valuation: Due to the lower risk premium assigned to InvITs compared to other equity market listings,
the Weighted Average Cost of Capital (WACC) for InvITs is relatively low. This helps the sponsor to transfer
assets to the InvIT at higher valuations (which are determined after considering lower discount rates), thereby
generating a higher return on investment for RE developers. The lower gestation period for construction in the RE
sector reduces risk, compared to other infrastructure projects, and therefore adds to higher valuations.

d) Ability to raise money without the need to list: Since SEBI has done away with the mandatory listing of InvITs
and allowed investments from Qualified Institutional Buyers (QIBs) in privately held InvITs, RE developers can
choose the private listing/unlisting option and raise money through private placement.

e) Debt financing: A publicly listed InvIT can raise leverage to as high as 70 percent of total assets held by it under
the InvIT structure or AUM, upon approval from at least 75 percent of unit holders, whereas privately held InvITs
can raise leverage higher than 70 percent of the total asset portfolio, depending upon mutual agreement between
investors and the RE developer. With such high leverage available at low cost (due to low-risk premiums), overall
WACC for the RE project SPV can be reduced, thus enhancing its valuation. Also, existing debt used for
developing greenfield assets can be repaid using InvIT proceeds, which has the following advantages:

1. Reducing the debt burden of the RE developer, thereby enabling the developer to acquire
debt financing at better terms in the future

2. The debt repaid to banks/FIs with InvIT proceeds is available to the same/new developers for
funding greenfield investments in RE

3. Reducing the debt tenure of greenfield projects significantly, to about 3-4 years, thereby
making it easier to manage asset/liability mismatches

4. Favorable terms of financing, especially regarding interest rates, for operational assets

For Investors:

a) Global platform for investment in RE projects: Investors from all over the world can subscribe to units issued
by InvITs. There is no minimum investment limit for InvITs; The minimum application value has been reduced to
the range of USD 134.5 (INR10,000)– USD 201.7 (INR 15,000). An investor can buy or sell as little as one unit
on stock exchanges. For privately held InvITs, institutional investors can directly invest into RE projects, as per
mutual terms of the agreement between the sponsor and investors. Such flexibility offered for a secured
investment makes it very attractive from both the investor’s and RE developer’s perspective.

b) Secured assets with low volatility: InvITs have low volatility compared to equity IPOs, as InvITs consist of
mostly operational assets. A publicly held InvIT can invest only up to 20 percent of AUM into under-construction
assets, while for a privately held InvIT this ratio can be higher, as per the mutual terms of the agreement between
investors and the sponsor. In comparison to equity markets—which are impacted by wide external factors that

22 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

C WHAT ARE InvITs?
are difficult to track, along with such nuances as derivatives, technical, and algorithm trading—InvITs offer a
platform of operational assets with lesser risk and lower volatility.

c) Attractive long-term investment: In addition to low risk, two other aspects of InvITs make them an attractive
platform for long-term investment: 1) predictable distributions, as SEBI requires InvITs to distribute a minimum of
90 percent of their cash earnings to investors at least semi-annually; and 2) corporate governance, as InvITs are
managed by an independent trustee and an investment manager, appointed by the InvIT on behalf of unit holders.
At least half the board of the investment manager is comprised of independent directors, to ensure independence
from the sponsor.

d) Tax-efficient structure: Due to the inherent nature of InvITs, which operate through a trust, certain exemptions
are available, which otherwise are not available to a corporate body, hence, making the majority of cash
distributions tax efficient. For example, the distribution of interest income earned from underlying investments in
SPVs of an InvIT is exempt under Section 10(23FC) of the Income Tax Act, 1961.

e) Control over assets: The assets of an InvIT are managed by the trustee, which is appointed to act in trust for unit
holders. This allows greater control over the assets of the InvIT, compared to any other form of investment in
capital markets. RE developers have no control over assets and cannot in any way influence distributions of cash
flow. As majority of the assets owned by InvITs are operational, intervention from RE developers is minimal.

Given the above-listed advantages of InvITs, it is clear that the current structure of the RE sector is amenable to
an InvIT-like investment structure. Stable, predictable cash flows generated by RE projects provide the requisite
comfort to investors, and capital recycling benefits are available to RE developers/investors, thereby aiding RE
growth and helping India achieve its envisaged RE targets.

23 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

C WHAT ARE InvITs?

IV. MAJOR LIMITATIONS/CHALLENGES OF InvITs FOR

RENEWABLE SECTOR IN INDIA

a) Credit ratings: As per regulations, InvITs must have an AAA rating. However, in RE, many PPA counterparties are
Distribution Companies (“discoms”) whose financial and operational performance is not up to the mark, and
hence these discoms do not have good credit ratings. Coupled with the issue of delayed payments by discoms to
RE developers, proper structuring shall be required to obtain AAA ratings for RE-backed InvITs.

b) Policy and regulatory uncertainty: Although long-term power purchase/offtake agreements have been signed
for RE projects, which provide clear visibility on tariffs over the next 20 years, there have been instances where
governments/regulators have tried to renegotiate or revise the terms of PPAs. This can have a detrimental impact
on revenues, thereby affecting the stability and predictability of cash flow, which forms the basis of the InvIT
structure. A drop in earnings can significantly affect dividends and impact the short-term sustainability of the InvIT,
which is likely to distress investors.

c) Limited growth potential: Only operational assets can be transferred to InvITs with stable and predictable cash
flows, and the growth potential of such assets is limited. In order to achieve higher growth rates, InvITs must
continuously scout for completed/operational assets, thus making the availability of such assets one of the major
factors for achieving higher growth. Owing to this, clear visibility on the future pipeline of acquisitions is required
to be demonstrated to the investors to evince sufficient interest.

d) Early stages and investor education: Although SEBI issued InvIT regulations in 2014, the first InvIT was created
only in 2017, and the policy and regulatory framework has been evolving over the past 3-4 years. This financial
instrument is relatively intricate (compared to a plain-vanilla acquisition) and requires better understanding and
acceptance among investors. The multifaceted nature of InvITs limits participation from all investor classes and
requires better understanding of underlying RE assets.

e) Requirement of scale: As per regulatory requirements, the minimum issue size of an InvIT is USD 67 Mn (INR 5
Bn). However, in the past, initial InvIT issues have proposed to raise in excess of USD 268 Mn (INR 20 Bn). The
size of the InvIT issue is critical to attract large pension funds and other investors, as they operate with minimum
investment thresholds, so smaller InvITs may not attract investor interest. Further, considering the smaller size of
RE assets, a lot of assets are required to be bundled together for achieving such critical mass.

V. CASE STUDIES OF POWER SECTOR InvITs

a) IndiGrid

IndiGrid, established in 2016, was India's first InvIT in the power-transmission sector, owning, operating, and
managing power- transmission networks and RE assets throughout India. Backed by KKR, IndiGrid is India’s first
platform in the power sector resembling YieldCos, housing AAA-rated cash flows from the long-term operating
transmission and solar assets. KKR is a leading global investment firm offering alternative asset management and
capital markets and insurance solutions, with approximately USD 459 Bn (INR 34.4 Tn) of assets under
management as of September 30, 2021. KKR sponsors investment funds that invest in private equity, credit, and
real assets, and has strategic partners that manage hedge funds.

24 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

C OVERVIEW:
WHAT ARE InvITs?

1. Incorporated in 2016, IndiGrid, manages USD 2.9 Bn (INR 214 Bn) in assets, with a presence in 18
Indian states and one union territory
2. Owns 40 transmission lines (~7,570 cKms), 11 substations (~13,550 MVA), and 100 MW of solar
generation facilities
3. Has AAA rating from CRISIL, ICRA, and India Ratings
4. Has achieved compounded annual growth rate of ~64 percent in terms of assets held by it, since
inception, and targets to maintain USD 4.02 Bn (INR 300 Bn) assets by 2022
5. Net debt/AUM: ~57 percent as of September 30, 2021

FIGURE 9: STRUCTURE OF INDIGRID InvIT

Source: IndiGrid, 2021,

USAID SAREP analysis

KKR and GIC are the major PE investors in the IndiGrid InvIT, and KKR is the sponsor. Axis Trustee Services Ltd
is the trustee, and IndiGrid Investment Managers Ltd (IIML) is the investment manager, with KKR owning the
majority stake. The Indigrid InvIT structure (Shah, Harsh 2021) is depicted in Figure 9, above.

25 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

C WHAT ARE InvITs?

KEY DEVELOPMENTS OVER LAST 2-3 YEARS

The key milestones with respect to fund-raising and acquisitions by Indigrid are shown in Figure 10, below:

FIGURE 10: KEY INDIGRID DEVELOPMENTS OVER LAST 2-3 YEARS

Source: Press Releases, Indigrid, 2021, Company Websites

A PROFITABLE DEAL FOR INVESTORS WITH LIMITED EXPOSURE :

Both PE investors and other unit holders of KKR have earned exceptional returns due to the mandatory
distribution of 90 percent cashflows generated (in form of interest income and dividends). Historical returns of
IndiGrid over the years are presented below :-

26 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

C WHAT ARE InvITs?

FIGURE 11. RETURNS TO INDIGRID INVESTORS

Returns for Investors (USD per Unit )

*Source: IndiGrid (2021)

In Figure 11 above, the returns/cash flow distributions have been broken into quarter-wise distribution as
presented by IndiGrid. Considering the same, it can be inferred that investors have clocked lucrative annualized
returns of about 22 percent, since listing (assuming inclusion of capital appreciation from stock price as of
December 31, 2021 i.e. USD 1.96 per unit or INR 146.04 per unit).

Apart from the above, sponsor (KKR) and other investors have also benefitted by limited exposure to specific
transmission assets housed/ring-fenced under the IndiGrid structure, and therefore unwary of the over-leverage
and project delays which appeared or may appear in the future, on the books of Sterlite Power (the original
developer of IndiGrid assets)

b) Powergrid Infrastructure Investment Trust (PGInvIT)

The POWERGRID Infrastructure Investment Trust (PGInvIT) was set up by Power Grid Corporation of India
Limited (PGCIL). The trust was registered with SEBI on January 7, 2021 as an InvIT. PGCIL, a Maharatna, Central
Public Sector Enterprise (CPSE), under the Ministry of Power of the GOI, is the sponsor, and its equity shares are
listed on the NSE and BSE. The PGInvIT IPO, comprised of a fresh issue of USD 669 Mn (INR 49.9 Bn) and an
offer for sale of USD 367.3 Mn (INR 27.4 Bn) (at the upper end), aggregating to the total offer size of ~USD 1.04
Bn (INR 77.3 Bn). The units have been listed on the NSE and BSE since May 14, 2021.

27 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

C OVERVIEW:
WHAT ARE InvITs?

1. Incorporated in 2021, PGInvIT, sponsored by the state-run POWERGRID, is the second listed InvIT
in the Indian power sector
2. PGCIL is the largest power-transmission company in India, with 168,457 ckms worth of
transmission lines and 440,310 MVA substation capacity as of June 30, 2021
3. Has AAA rating from CRISIL
4. The initial portfolio consists of 5 infrastructure transmission projects, comprising 11 transmission
lines(c.3,699 cKms) and three substations (c.6,630 MVA)
5. Net debt/AUM: Zero

InvIT STRUCTURE

FIGURE 12: POWERGRID InvIT STRUCTURE

Source: PGInvIT, 2021, USAID SAREP analysis

PGCIL holds 15 percent of the InvIT and is the sponsor. The balance of 85 percent is held by public unit holders.
IDBI Trusteeship Services Ltd is the trustee, and Powergrid Unchachar Transmission Limited (PUTL) is the
investment manager. Of the initial portfolio assets, 74 percent were transferred to the InvIT, and the remaining 26
percent are held by PGCIL. The PGInvIT structure (PGInvIT, 2021) is depicted in Figure 12, above.

28 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

C WHAT ARE InvITs?

KEY DEVELOPMENTS:

1. Valuation as of December 31, 2020 was ~USD 1.39 Bn (INR 103.87 Bn) on a discounted cash-flow
basis

2. InvIT units listed at a premium of 4 percent, at an initial trust valuation of ~USD 1.22 Bn (INR 91Bn)

3. Following a positive response, PGCIL is planning to merge 18 more assets into the InvIT

INVESTORS RETURNS :

1. Being listed recently in May 2021, PGInvIT declared its first distribution of Rs. 4.50 per unit (PGInvIT,
2021) for FY 2021-22 (estimated at 9 percent annual return). Further, considering the stock price
appreciation of PGInvIT as of December 31, 2021, (USD 1.62 per unit or INR 121 per unit) over
the initial price of (USD 1.34 per unit or INR 100 per unit), it may be implied that the annualized
returns are to the tune of 48 percent. However, it may be too premature to conclude, as only six
months have passed since listing.
2. Further, the trust will distribute at least 90 percent of its distributable income to unit holders. This
distribution will be made not less than once per quarter in every financial year.

c) Virescent Renewable Energy Trust (VRET)

Virescent Renewable Energy Trust (VRET) was established as an InvIT under the Indian Trusts Act, 1882, with the
objective of undertaking investment activities in accordance with SEBI (Infrastructure Investment Trusts)
Regulations, 2014. VRET has raised USD 62 Mn (INR 4.6 Bn) from a group of foreign and domestic investors, led
by Alberta Investment Management Corporation (AIMCo), one of Canada’s largest institutional investment
managers. KKR set up Virescent in October 2020 to acquire operating RE assets in India. VRET has been assigned
an AAA/stable rating for its loan facilities by CRISIL, India Ratings, S&P, and Fitch’s India affiliates, and is the only
Indian RE InvIT to have been assigned this rating, based on the projected growth of the portfolio to 2 GWp over
the next two to three years. Terra Asia Holdings II Pte. Limited (Terra II) is the sponsor and is an affiliate of the
funds, vehicles and/or entities managed and/or advised by affiliates of KKR.

OVERVIEW:
1. Incorporated in 2020, VRET, sponsored by KKR, is the first RE-focused InvIT
2. Aims to play a key role in India’s infrastructure development and fulfill the country’s sustainable
development goals
3. Manages a portfolio of ~400 MWp of solar assets across India
4. Has AAA/stable rating for its loan facilities, from various rating bodies
5.Net debt/AUM: 26.4 percent as of March 31, 2021 (pre-issue)

29 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

C InvIT STRUCTURE
WHAT ARE InvITs?

FIGURE 13 : VIRESCENT InvIT STRUCTURE

Source: Press releases, VRET, 2021, USAID SAREP analysis

Terra Asia and AIMCo are the major PE investors in Virescent, with Terra Asia serving as the sponsor. Axis Trustee
Services Ltd is the trustee, and Virescent Infrastructure Investment Managers is the investment manager. The
Virescent InvIT structure is depicted in Figure 13 above.

KEY FACTS ABOUT VIRESCENT

1. Valuation as March 31, 2021 is ~USD 327 Mn (INR 24.4 Bn) on discounted cash-flow basis
2. This InvIT transaction marks AIMCo’s debut in the Indian market, at a 20-percent stake worth USD
54 Mn (INR 4 Bn)
3. The current portfolio comprises operating solar assets of 394.4MWp, with advanced discussions to
acquire an additional 55 MWp from Focal Energy. Further, as per Virescent estimates, the portfolio is
projected to grow to 2 GWp over the next 2-3 years.

INVESTORS RETURNS :

1. The trust will distribute at least 90 percent of distributable income unit holders. Distributions will
be declared and made not less than once per quarter in every financial year.
2. Notwithstanding the foregoing, the first declaration of distribution by the trust will be made within
six months of the listing and trading of units pursuant to the initial offer by the trust, subject to
compliance with InvIT Regulations.
3. As of December 2021, no announcement about distribution to unit holders had been made.

30 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

C WHAT ARE InvITs?
A map of InvIT assets in the Indian power sector is shown in Figure 14, below:

FIGURE 14: InvIT ASSETS IN POWER SECTOR IN INDIA (as on Dec 31, 2021)

Source: USAID- SAREP Analysis

31 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

C WHAT ARE InvITs?
MAJOR LEARNINGS FROM CASE STUDIES OF POWER SECTOR InvITs

Some major learnings that emerge from the above case studies on power sector InvITs include:

1. AAA rating: As per regulatory requirements, all the InvITs are required to obtain a AAA rating
in order to be registered with SEBI. This AAA rating is issued basis the stability and predictability
of cash flows from the operational assets. In case of power sector assets, this assumes significance
as strong counterparties are essential for obtaining such a rating, and owing to discoms
being the counterparties, obtaining such a rating becomes difficult.

2. Strong sponsor profile: The two listed transmission InvITs were sponsored by marquee
project developers (Indigrid initially by Sterlite, and PGInvIT by PGCIL). Consequently, both
IndiGrid and PGInvIT were oversubscribed by 1.17 times and 4.83 times, which hints at
investors’ confidence in project developers with a strong track record (as sponsors) in asset
development. Such entities who can perform the dual role of InvIT sponsor and asset
development provide higher visibility on future portfolio growth (through the transfer of more
operational assets), thus enhancing investor confidence.

3. Ring-fencing of assets: All projects forming part of power sector InvITs were first developed
through a SPV model, and then transferred to InvITs after becoming operational i.e. the individual
project SPVs containing the renewable assets were transferred to the InvIT. Alternatively, the
operational RE assets can be merged together in a single subsidiary for such transfer to InvIT
as well.

4. Investment size: Although the initial investment scale for Indigrid was small, it has grown
substantially to USD 2.9 Bn (INR 214 Bn) over the past 4-5 years. For PGInvIT, the investment
scale was substantial, around USD 1.04 Bn (INR 77 Bn). With both InvITs being oversubscribed
on Indian bourses, it clearly shows that investors have a penchant for large upfront investment
at the time of issuance or in the next 1-2 years.

5. Reliability of long and stable returns/yields: RE and Transmission sectors by their inherent
nature provide for long-term visibility of pre-determined returns/yields with minimum variations,
as the requisite agreements with relevant counter-parties are generally of large tenures i.e.
25-year term of power-purchase agreements (PPAs) for renewables, and the 35-year term for
transmission service agreements (TSAs). The investor interest may be subdued in case such
visibility of yields is not available or alternatively in case large variations are expected.

32 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

D STRUCTURING OF InvITs
Asset values and earning power are the dominant factors affecting the
valuation of a controlling interest in a business. Market price, which
governs valuation of minority interest positions, is of little or no
importance in valuing a controlling interest.
- Warren Buffet
I. STEPS TO SETTING UP AN InvIT

The major steps involved in setting up an InvIT are depicted in Figure 15, below:

FIGURE 15: STEPS INVOLVED IN SETTING UP AN InvIT

SOURCE: USAID SAREP ANALYSIS

33 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

D STRUCTURING OF InvITs

II. MAJOR CONSIDERATIONS – SETTING UP OF InvIT

As mentioned in previous sections, the Indian RE sector is amenable to an InvIT-like structure, which will help fill
gaps in investment requirements and thus help meet 2030 RE capacity-addition targets. A few considerations
should be kept in mind when designing an RE InvIT, specifically:

1. Valuation
2. Type of listing – public or private
3. Type of target investors
4. Rating rationale
5. Major risks and mitigation

VALUATION 1

The methodology used to arrive at the fair enterprise value of an InvIT is discounted cash flow (DCF) an
income-based approach considering visibility of long term and stable cash flows. The fair enterprise value of each
SPV in the InvIT is assessed on a stand-alone basis using the income DCF valuation method, and then the
stand-alone valuations of the respective SPVs are added together.

DCF valuation: This method forecasts future cash flow and discounts it back to the valuation date, estimating a
net present value of cash flow of the project SPV. A terminal value at the end of the explicit forecast period is then
determined, and that value is also discounted back to the valuation date, to give an overall valuation of the project
SPV. The DCF methodology typically requires the forecast period to be of such a length to enable the business to
achieve a stable level of earnings or to be reflective of an entire operation cycle for more cyclical industries. The
rate at which future cash flows are discounted (the discount rate) should reflect not only the time value of money
but also the risk associated with future business operations. The discount rate most generally employed is
weighted average cost of capital (WACC) or cost of equity (Ke), reflecting an optimal (as opposed to actual)
financing structure.

Major parameters for the income-based DCF valuation method

a) Revenue: The revenue for RE projects is derived from long-term PPAs/power offtake arrangements between the
developer/power producer and offtaker/power purchaser. The revenue from an RE project can be projected
using reasonable generation estimates, and then multiplied by the tariff agreed under the PPA/power offtake
arrangement after taking into consideration the plant degradation factor. The Plant Load Factor (PLF) for solar
projects normally varies between 18-20 percent and should be considered accordingly. In addition, a higher DC:
AC ratio (more than 1) should also be adjusted.

b) Operations & maintenance: RE projects incur annual employee and administrative expenses, as well as
expenses associated with compliances with audits and project maintenance. These are grouped together and
designated as operations & maintenance (O&M) expenses. The yearly O&M is usually adjusted for inflation.

1
Based on USAID SAREP’s analysis.

34 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

D STRUCTURING OF InvITs
c) Insurance Expense: To safeguard the RE project against any unforeseen circumstances, the project SPV is
required to buy insurance and accordingly pay an insurance premium every year.

d) Earnings before interest, taxes, depreciation, and amortization (EBITDA): EBITDA is calculated by
subtracting the cost of O&M and insurance from project revenues.

e) Interest: This refers to interest payable on the debt obligations of the project SPV. Interest expense is calculated
by multiplying the applicable rate of interest by that of the outstanding loan obligations of the project SPVs. Since
the applicable rate of interest can vary over time, the current applicable rate of interest is generally used to arrive
at the forecast for future years.

f) Depreciation: The RE project developer can choose the method of depreciation, either straight line method
(SLM) or written-down value (WDV). The depreciation and interest expense are subtracted from EBITDA to
arrive at profit before tax (PBT) for the project SPV.
1

g) Tax: Depending upon the type of method chosen, tax liability is assessed by multiplying the applicable tax rate by
the profit before tax (PBT). Parameters such as Minimum Alternate Tax (MAT) credit, carry-forward losses, etc.,
should also be factored into these calculations. Any deferred tax asset/liability over period in question should also
be considered in arriving at the tax liability.

h) Free cash flow to firm (FCFF): These are distributable cash flows available for distribution to investors,
shareholders, and lenders. FCFF is calculated by reducing the amount payable as tax from EBITDA.

i) Discounting factor (DF): DF is applied to discount future cash flows, and is arrived at by calculating WACC,
which in turn is calculated by adding the cost of debt to the cost of equity, multiplied by the leverage ratio.

For example, if:

Cost of debt (Kd) = 7.14%
Cost of equity (Ke) = 11%
Debt to equity leverage ratio = 70:30
Then:
WACC = (7.14%*70%) +(11%*30%) = 8.30%

All the future cash flows of SPVs are discounted using the WACC, using the above formula. This discounted value
is known as present value of free cash flow (PV FCF).

j) Terminal value: This is calculated using the business potential for future growth, beyond the explicit forecast
period. The constant growth or exit multiple method is applied to arrive at a terminal value, which is then
discounted using the Discounting Factor to arrive at the present value of the terminal value.

k) Enterprise value (EV): This is calculated by aggregating the present value of cash flows for the explicit period
with the terminal value. EV is reduced by the value of debt, if any (net of cash and cash equivalent), adding surplus
assets and considering other adjustments as appropriate to arrive at equity value.

The EV arrived at using the above methodology indicates the amount payable to the RE developer by the InvIT
upon transfer of the RE asset. The EV is calculated on a specific date, at which the value of the assets is measured
or assessed. Valuation is time specific and can change with the passage of time inter-alia due to changes in the asset
cashflows and hence, can be different for different dates.

35 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

D STRUCTURING OF InvITs
These parameters have a direct impact on the valuations of RE projects, and variations can significantly change the
assessed EV. Changes in WACC and revenues can have a particularly major impact on the EV.

COMPARISON OF InvIT VALUATION WITH OTHER TRANSACTIONS

In order to compare the valuation of an InvIT with other transactions (including M&A, IPO), it may be necessary
to simulate a real scenario of valuation of individual SPVs using the DCF method. Accordingly, an illustration of the
income approach DCF valuation method in accordance with Indian Accounting Standards (Ind AS), is prepared
using the DCF method for arriving at the fair enterprise value of a 100 MW solar project is provided in Annexure
III – Valuation Approach for InvIT.

The present valuation exercise is based on future financial performance and opinions on future credit risk, cost of
debt assumptions, etc., which represent reasonable expectations at a particular point in time. Actual results
achieved during the period covered by the prospective financial analysis may vary from the estimates, and the
variations may be material.

The valuation methodology described above is not specific to InvITs and can be used for M&A deals as well.
However, there are certain differences in EVs between InvITs and M&A deals, which are shown in Table 5
below :-

TABLE 5. VALUATION DIFFERENCES BETWEEN InvITs AND OTHER TRANSACTIONS

PARTICULARS InvIT TRANSACTIONS OTHER THAN InvIT

WACC As the WACC for InvITs is Typically, WACC is higher for M&A
lower, compared to other asset- transaction.
valuation methods, the valuation
arrived at is higher However, in the event of RE-IPO, the
valuation may be higher, due to a growth
factor/ multiple assigned to the business of
the developer

Limit on Capital Once the project is Limited pool of capital is raised as part of
raise commissioned, the developer can an IPO as the dilution is smaller, thereby
sell the entire holding in the limiting the quantum of capital raise.
project to InvIT and arrive at the
valuation. In a M&A transaction, the entire 100%
dilution can be done.

Complexity Valuations are much simpler to The growth multiples, especially in the case
assess and negotiate of IPO/equity raise, makes the valuation
complicated and results in long, protracted
negotiations.

36 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

D STRUCTURING OF InvITs
TYPES OF InvITs – PUBLIC OR PRIVATE
There are three types of InvITs – public listed, private listed, and private unlisted.

FIGURE 16: TYPE OF LISTINGS OF InvIT

The RE developer selects the InvIT structure during the registration/issuance process. Each structure has its own
advantages and disadvantages, which must be deliberated basis the requirement of developer. Key points to
consider while setting up of an InvIT are :-

Introduction – This type of InvIT has access to a wider pool of investors, compared to private-
listed/unlisted InvITs. All kinds of capital market investors can participate in a public InvIT, which
thus provides wider access to the funds that can be deployed by a vast investor base.

Investor’s Perspective – From the investor’s perspective, public-listed InvITs consist of

long-term, secured RE assets with predictable cash flows and have superior corporate
governance. In order to list, public InvITs have to provide full disclosure per SEBI guidelines,
allowing investors to make informed decisions.
Public listed
RE Developer’s Perspective – From the RE developer’s perspective, public-listed InvITs
attract a wider base of investors, providing access to a larger pool of assets. Due to wide
investor participation, the low risk profile of assets and the requirement to provide full
disclosure, these InvITs raise funds at lower costs, with a lower WACC and discounting factor.
This low cost of capital helps the sponsor determine the valuation of assets.

Introduction – A private listed InvIT is similar to a public listed InvIT and is also listed on the
stock exchange. However, the invitation for an offer is extended by the sponsor to a limited
number of individuals or institutional investors, and not to retail investors.

Investor’s Perspective – From an investor’s perspective, a private listed InvIT provides a pool
of RE assets with long-term, secured and predictable cash flows and ranks highly on corporate
governance. Investors enjoy preferential treatment in that they can negotiate higher returns,
compared to public-listed InvITs, since the units are offered on a private placement basis.
Private listed
RE Developer’s Perspective – From the RE developer’s perspective, a private-listed InvIT does
entail large disclosure requirements, and also has lower thresholds in terms of the size of issue,
the number of investors, and minimum subscription.

37 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

D STRUCTURING OF InvITs

Introduction – Unlike the other two types of InvIT, private unlisted InvITs are not listed on
stock exchanges, and their units cannot be bought or sold on stock exchanges. All the units are
held privately by a limited number of individuals or institutions. These InvITs are governed by
terms of an agreement under the trust deed, executed between the investor, the trustee, and
the sponsor.

Investor’s Perspective – From an investor’s perspective, these InvITs allow negotiations for a
higher return on investment with the RE developer. At the same time, these InvITs do not have
a cap on leverage, which essentially means they can raise leverage higher than the 70 percent of
AUM cap allowed for the other two types of InvITs. This helps investors boost returns, due to
Private unlisted low debt costs and a higher leverage ratio.

RE Developer’s Perspective – From the RE developer’s perspective, these InvITs do away

with the need for listing, which can be a cumbersome exercise. Some RE developers do not have
the capital or bandwidth to list on a stock exchange. Also, these InvITs have lower thresholds in
terms of the issue size, minimum subscription, a minimum number of investors, minimum lot
size, and borrowing limit.

The type of InvIT should be selected based on considerations of risk appetite, valuation, disclosure, and other
parameters. If investors are looking for higher returns, they should opt for private-listed/unlisted InvITs, which
however entail higher risks compared to public-listed InvITs. Long-term, patient investors seeking secured and
predictable cash flows should choose to invest in public listed InvITs.

If an RE developer aims to raise a smaller issue size and does not want to go through the process of listing, it
should choose to set up a private or unlisted InvIT. However, if the developer wants to raise capital at lower
costs, a public-listed InvIT is the better choice.

Only three of the 15 registered InvITs in India are listed publicly. PGCIL uses a public-listed InvIT, whereas
National Highways Authority of India (NHAI), another government entity, has opted for a private InvIT. This
shows that InvIT structures vary from transaction to transaction, and aspects such as investor base, return
expectations, size of issue, sector, etc., need to be evaluated before selecting the appropriate InvIT type.

38 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

D STRUCTURING OF InvITs
TYPES OF TARGET INVESTORS

Since RE assets offered under InvITs are long-term, secured and produce predictable cash flows, they can attract
a large investor base. Potential investors include pension funds, mutual funds, insurance companies, and private
equity funds with a mandate to invest in clean-energy projects. However, the type of investors targeted depends
on the type of InvIT, each of which has its own risk and return profile.

FIGURE 17: TYPE OF TARGET INVESTORS

InvITs offer investors an opportunity to diversify and hedge their investment portfolios through a tax-efficient
structure and a robust capital framework for owning operational infrastructure assets. While InvIT regulations
allow for the participation of all kinds of investors, Indian or foreign, some major investor classes for InvITs
include:

a) Institutional investors: These investors wish to diversify into holding portfolios, which
are less risky and have improved visibility for long-term cash flow. InvITs provide a good
hedge against the market risk that institutional investors are otherwise exposed to. At the
same time, in the case of private InvITs (listed or unlisted), these investors can negotiate
higher returns from the sponsor. Therefore, InvITs can provide not only a long-term and
safer investment option, but also the ability to earn higher returns with lesser risk.

b) Family trusts/high net-worth individuals: Since InvITs provide a hedge against market
volatility, they are an opportune investment option for fund managers of family trusts or
High Net-Worth Individuals (HNIs) looking to invest a portion of their capital into a less
risky portfolio with high visibility on cash flow.

c) Non-banking financial companies (NBFCs) registered with the Reserve Bank of

India (RBI): RBI allows NBFCs to invest in InvITs, in a bid to promote infrastructure
development through this investment route. InvITs provide steady, low-risk, superior
returns compared to other debt-market instruments. SEBI also allows NBFCs to invest 5-25
percent of the total offer size of the InvIT, thereby promoting greater participation by such
investors.

39 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

D STRUCTURING OF InvITs

d) Insurance companies: The Insurance Regulatory and Development Authority of India

(IRDAI) allows insurance companies to invest in debt securities issued by InvITs. Insurance
companies now have the additional opportunity to invest in top-rated RE assets. By the very
nature of their business, insurance companies are long-term players, and hence ideal
candidates for investments in long-term infrastructure projects.

e) Mutual funds: Investing in RE assets can be quite complex in terms of understanding the
risk profile and challenges of the infrastructure sector, and the factors governing valuation
for RE assets. An individual investor may not have the expertise to understand these
complexities. However, mutual funds are better positioned to understand and invest these
assets. By law, mutual funds are allowed to invest up to 5 percent of their total assets in
alternative investment funds like InvITs.

f) Retail investors: Public-listed InvITs can offer their units to retail investors. As a product
category, InvITs have the potential to earn better returns than fixed income instruments but
have lower returns than equities over the long term. SEBI has reduced the minimum
investment limits on InvITs, making them more accessible to retail investors.

RATING METHODOLOGY FOR InvITs

InvITs must receive AAA rating in order to be registered. For RE InvITs, since many of the counterparties are
discoms, this rating can be difficult to achieve given the credit ratings of discoms and delays in making payments.

The credit rating of an InvIT reflects its ability to service its debt obligations in a timely manner. The credit-rating
assessment involves evaluating the predictability and adequacy of the InvIT’s cash flows to service external debt,
as well as the operational and financial risk profile of the InvIT’s portfolio of assets. The rating body factors in the
external debt proposed by the InvIT and its constituent portfolio of assets (i.e., committed liabilities), and also
contingent liabilities, if any. In case the InvIT acquires new assets or raises additional debt post rating, the impact
on the rating must be evaluated.

40 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

D STRUCTURING OF InvITs
The credit rating of the InvIT is not a reflection of the creditworthiness of the individual SPVs of the InvIT, the
pricing of units issued by InvIT, or the InvIT’s market performance and potential returns to unit holders. It also
does not reflect the ability of SPVs to service the debt extended by the InvIT, if any.

CRISIL METHODOLOGY FOR RATING INVESTMENT TRUSTS

REITs and InvITs are vehicles that invest primarily in real estate and infrastructure assets, respectively. These
investment trusts are governed by regulations, with guidelines on the listing, distribution of cash flows,
transparency and discipline of cash flows, and investment management. While CRISIL’s rating approach is broadly
the same for REITs and InvITs, the credit risk profile of underlying assets is assessed by applying specific criteria
relevant to the real estate and infrastructure sectors. The following aspects play an important role in the debt
rating of InvITs:

FIGURE 18 : KEY ASPECTS FOR RATING DEBT IN InvITs

Source: CRISIL Limited (2019), USAID SAREP analysis

41 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

D STRUCTURING OF InvITs

CREDIT RISK PROFILE: INVESTMENT TRUSTS VIS-À-VIS SPVs

Debt can be raised by both the investment trust and its underlying SPVs. The credit risk profile of debt residing in
SPVs can be different from that of debt residing in the investment trust.

1. The credit risk profile of SPVs depends on their available cash flow of the SPVs. If the debt of the SPV
is exposed to project execution risk, risks related to implementation, funding, demand, and pricing
for the SPV’s cash flows are factored in.

2. The credit risk profile of investment trusts is derived from the aggregate credit risk profiles of the
SPVs and assets they hold. However, the credit risk profile of the debt residing in the investment trust
can be different from that of the aggregate credit risk profile of debt residing in the SPVs, based on
the following factors:

a. Repayment profile, and other safety mechanisms built into the debt residing in the trust
b. Diversification benefits from accessing cash flow from multiple SPVs
c. Headroom for additional debt, based on the value of assets in the SPVs
d. Subordination of cash flow from the SPVs to the investment trust, depending on

i. Level of external debt in SPVs

ii. Working capital requirements in SPVs
iii. Capital expenditures in SPVs
iv. Percentage of shareholding held by the investment trust in SPVs

When arriving at the final credit risk profile of the investment trust and SPVs, the rating agency will also factor in
the extent of distress support that can be provided by the investment trust to weaker SPVs.

III. MAJOR RISKS AND MITIGATION

Some of the major risks and possible mitigation for such risks in relation to InvITs are listed in Table 6 below:

TABLE 6. MAJOR RISKS AND MITIGATION IN RELATION TO INVITS

RE sector risks Mitigation

Investors in InvITs are exposed to the risks associated with the RE InvITs can opt for diversified portfolios, consisting of assets belonging
sector. Any changes in existing policies can cause a detrimental to different counterparties, thereby distributing the risk over a larger
change in the cash flow of the assets held by the InvIT. Sanctity of group. This diversification helps investors reduce the risk associated
contracts, renegotiation of PPAs, etc. are some of the major risks in with a single counterparty.
this category.

42 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

D STRUCTURING OF InvITs
Revenue risks

This refers to the inability of the project to generate adequate

Mitigation

For RE projects, these risks are mitigated since revenue is derived

revenues to meet its operating expenses and debt-servicing from long-term and binding PPAs. These PPAs are take-or-pay
obligations, due to poor demand at the price point offered, the contracts for which there is no history of default from offtakers,
inability of the project to pass on increases in input costs, or both. although there have been significant delays.

Operational risks Mitigation

This refers to the risk of the project not conforming to required SEBI has mandated a lock-in period of three years for RE developers.
performance parameters (including module PLF degradation) over During this period, any issue related to operational risks can be
the period of the concession agreement/PPA. If not properly addressed by the developer.
addressed, this risk could manifest in the form of reduced revenues, Adequate O&M costs, in line with best practices, also must be
increased operating costs, increased capital expenditure (or major considered, as should the quality of assets and workmanship. For RE
maintenance) at a later date, and, in extreme cases, could also lead to projects, O&M requirements are minimal, accounting for about 4-5%
liquidated damage-related liabilities on the part of the offtaker. of revenue. There are a large number of service providers that can
provide requisite O&M services for RE projects at minimal cost.

Regulatory risks Mitigation

The assets of InvITs are subject to changes in applicable regulations. InvITs can opt for diversified portfolios, consisting of assets belonging
These changes can affect the performance of the InvIT’s underlying to different counterparties. This helps investors reduce the risks
assets, thereby affecting the InvIT’s performance. associated with a single counterparty.
Further, the GOI has provided strong support to the RE sector in the
past, and considering stated growth targets, the same level of support
can be expected in the future.

Financial risks Mitigation

This refers to when the cash flows available from underlying assets Investors can choose to invest in InvITs where operations have
are inadequate to meet the InvIT’s obligations. stabilized, i.e., those with a two or three-year operational track
record and predictable cash flows.
The InvIT can also create a debt-service reserve account (DSRA)
to cover the debt- servicing obligations for a certain period, and/or a
cash-reserve sinking fund for major expenditures in the future.

Structural risks Mitigation

The structure of an InvIT entails lower participation from the RE Investors can choose to invest in an InvIT with an asset pool of
developer after the transfer of assets, at which point the risks projects with strong operational track records. Also, the InvITs
associated with these assets are passed on to the InvIT. The RE should create reserves, in the form of a DSRA, as well as maintenance
developer does not provide funding support in case of financial reserves from surplus cash flows to cover any future eventualities.
deterioration of assets. Also, stringent due diligence with regard to the quality of underlying
assets should be undertaken before the transfer, to minimize any
potential issues.

43 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

D STRUCTURING OF InvITs
Management risks

This refers to risks associated with the issuer’s management, as well

as the experience and track record of the investment manager,
Mitigation

As per InvIT regulations, the RE developer must have a sound track

record of at least five years in infrastructure development or fund
trustee, and project manager. management. Further, if the sponsor is a RE developer, it should have
developed at least two prior projects.
InvIT regulations also specify that the trustee, investment manager
and project manager must have proven track records. Placing units in
a trust, where the majority of shares of the underlying assets are held
by the trust, provides an additional safeguard against any possible
risks associated with corporate governance.

Counterparty credit risks Mitigation

The financial health of the counterparty is one of the key parameters Counterparty diversification provides a safeguard to investors against
determining the lag between the contractual due date and the actual counterparty credit risks.
date of payments (receivable cycle). The credibility of the
counterparty is an important aspect of an InvIT since the
performance of underlying assets depends on the counterparty’s
ability to honor the contract.

High-leverage risks Mitigation

The cap on leverage is 70% for listed InvITs and can be higher than The InvIT can choose to have a lower leverage ratio and can also
70% for unlisted InvITs. These high leverage ratios may pose financial create a DSRA to cover debt-servicing obligations over a certain
risks. period. In addition, a pooled financing mechanism can be explored,
wherein the cash flows of assets are pooled together.

Hedging risks Mitigation

Foreign-currency risk can arise from unhedged liabilities, especially The InvIT can hedge the underlying assets exposed to foreign-
for InvITs with unhedged foreign currency borrowings to fund currency risk.
project costs.

Source: USAID SAREP analysis

44 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

E THE WAY FORWARD
Our universe is a sea of energy - free, clean energy. It is all out there
waiting for us to set sail upon it.
- Robert Adams

InvITs are especially suited instruments to attract investment into the Indian RE sector. India’s recent
commitment to achieve 500 GW of installed non-fossil capacity by 2030 will require investment of more than
USD 300 Bn (INR 22.5 Tn) (Buckley, 2021). The GOI is providing policy support to boost investment in the RE
sector, and GOI’s think tank NITI Aayog has also identified InvITs as an important asset- monetization option.

Despite their many advantages and vast potential, InvITs have not taken off in the Indian RE sector; Virescent is
the only RE InvIT and IndiGrid only has a small RE asset as part of its portfolio. To date, the proportion of RE
in InvIT investments is a miniscule one percent. InvITs in the roads and power-transmission sectors have been
able to attract major investment, despite differences in the cash flows of these two sectors. The
power-transmission sector has long-term, sustainable cash flows from 35-year contractual arrangements,
whereas tolling revenues in the roads sector are uncertain due to variations in traffic. The renewables sector is
similar to the transmission sector, owing to long-term PPAs with steady revenues; however, there have been
some uncertainties, with regards to delayed payments from discoms, cancelled auctions and PPA renegotiations
which raise major questions about the consistency and predictability of cash flows.

I. CONSIDERATIONS FOR PROPOSED InvIT STRUCTURES IN THE

RENEWABLE SECTOR
Some of the key factors that need to be considered in evaluating an InvIT transaction include:

a) AAA rating: Perhaps the most formidable challenge for an RE InvIT is obtaining AAA rating. In the RE
sector, PPAs governing the contractual framework for the life of the asset are signed with discoms, which
are responsible for purchasing electricity and making payments. However, the financial and operational
performance of discoms is often poor, and their credit ratings are below par. Delayed payments by
discoms and attempts to renegotiate existing PPAs (sanctity of contracts) also add to the negative
perception.

b) Assured investor yields: For RE assets, a 25-year PPA with discoms/SECI provides clear visibility of
cash flow over the life of the asset, and investor yields can be assessed with much more accuracy.
However, delayed payments by discoms and PPA renegotiations act as a deterrent for investors and
impact their confidence. This is important because 90 percent of InvIT net cash flows must be distributed
to investors periodically.

c) Future growth: A major concern of InvIT investors is growth, as current cash flows in the RE sector
are fairly steady and do not increase with time. The only possible option for growth for an RE InvIT is to
constantly acquire RE assets and continuously enhance the existing portfolio. Consistent additions to the
portfolio also help optimize the capital structure, enhancing returns to investors.

d) Valuation: Owing to the huge growth envisaged in the RE sector over the next decade, valuations at
the organizational level of the RE sector are on the high side, as a growth multiple is included. In RE InvITs,
where cash flows of operational assets are nearly constant, such growth multiples are not included, leading
to lower valuations. This is partly offset by the lower cost of equity offered by these InvITs.

45 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

E THE WAY FORWARD
e) Investment scale A public-listed InvIT must have assets of at least USD 67 Mn (INR 5 Bn), and for
private-listed InvITs, the issue size should be at least USD 33.5 Mn (INR 2.5 Bn). In past InvIT issuances,
the size of the initial portfolios has been much higher, around USD 268 Mn (INR 20 Bn) to USD 402 Mn
(INR 30 Bn). Pension funds prefer to invest larger amounts in transactions and prefer InvITs with larger
portfolios. This aspect is also important because an individual investor can contribute a maximum of 25
percent of the InvIT’s value.

f) Investment structure: As RE operational assets must be transferred to the InvIT trust, there must be
a clear demarcation starting from the development stage, as associated project cash flows need to be
accounted for separately. It also helps to have a separate contractual framework for each asset, so that
issues faced by one asset do not result in penalties on other assets.

g) Distributed assets: Although a large number of assets with different counterparties provides a hedge
against the concentration risk perceived by investors, the large number of compliances required can be
onerous to InvIT management. The assets may wind up scattered across wide geographical areas, which
may increase the InvIT’s O&M costs.

46 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

E THE WAY FORWARD

II. FINDINGS AND RECOMMENDATIONS

For an RE InvIT to succeed in the Indian market, it needs:

AAA rating and assured yields are imperative for an InvIT to attract sufficient investor interest. The
Strong
RE projects chosen for InvITs should have strong counterparties like SECI or discoms that are
counterparties
financially viable and have a proven track record of timely payments to private developers. At least
50 percent of the cash flow should be from strong counterparties, to enable AAA rating. Each
project in the InvIT portfolio should have a payment track record of at least one year. A lower debt
to equity ratio may also be considered, although this will reduce yields for equity investors.

Proper
At least 80 percent of the projects in an RE InvIT must be operational; however, there are
portfolio size currently a limited amount of such projects in RE. This situation is expected to change, given the
ambitious 2030 targets set by the GOI. A large number of operational RE assets should become
available over the next 12-18 months, which will support the creation of InvITs.

Future The revenues from operational RE projects are fairly constant and the growth of cash flows over 20-25
years is limited, so continuous acquisition of assets is the only way to enhance investor yields over longer
growth
time frames. Future growth of cash flow will help to ensure the smooth entry and exit of InvIT investors.
prospects In addition, consistent enhancement of portfolios will maintain the optimum capital structure for
investor returns. Therefore, the InvIT sponsor should have strong experience in developing assets as
observed in case of IndiGrid (initially) and PGInvIT which were backed by strong developers (Sterlite
and PGCIL, respectively).

RE growth in India has been phenomenal over the last 6-7 years, with a large number of developers
Proper entering the space and the corresponding establishment of investor-backed platforms. This growth
valuation boom is expected to continue for at least next 10-12 years. Because of this, valuations at the
organizational level are much higher, and equity instruments like IPOs are preferred as they lead to
higher valuations. However, InvITs have the advantage of segregating asset development from asset
management, and therefore different classes of investors can be engaged for these separate risk profiles,
helping in the determination of true value.

Solid Housing project assets in separate SPVs, from the development stage, is the preferred option for InvITs,
investment as demergers after construction can be long, tedious, and require many layers of approval for
structure implementation. Although recent GOI policy changes have granted relief to Public Sector Undertakings
(PSUs) for these demergers, creating SPV-like structures and effecting their sale to an InvIT trust on a
periodic basis remains the preferred option. Issues like asset valuation, liabilities, asset registers, tax,
accounting, etc. can be managed in a more efficient manner if relevant assets are placed in SPVs from
the start of development.

47 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

E The right
type of
investors
THE WAY FORWARD

Public-listed InvITs have a lower cost of capital, but allow less flexibility in decision making,
considering the large investor base and their associated expectations. Private InvITs are helpful for
targeting specific types of investors, but the return expectations will be on the high side.
Therefore, the choice of target investors varies on a case-to-case basis and depends on the
preference of the sponsor.

The right
type of InvIT Whether to choose a public-listed, private-listed, or private-unlisted InvIT depends on capital
requirements, cost of capital, leverage ratios, etc. A sponsor aiming to raise a small issue size may
structure not want to go through the cumbersome process of listing and may choose instead to set up a
private unlisted InvIT. However, if the sponsor wishes to raise capital at a lower cost, it can opt for
a public-listed InvIT.

InvITs have the potential to help the Indian RE sector grow at an exponential rate and enable the country to meet
its ambitious clean-energy goals committed during the COP26 summit at Glasgow. By issuing InvITs, RE
developers can recycle capital in a much shorter period of time, thus aiding quicker reinvestment into greenfield
RE projects, in addition to providing access to a wider pool of capital. For banks/FIs, the debts are repaid over a
shorter cycle, enabling them to fund a larger number of RE projects. The Government of India, on the other hand,
realizing the potential of InvITs has brought in a slew of reforms, which has enabled the instrument to take off in
the last couple of years. Niti Aayog’s acceptance of InvITs as an asset monetization instrument also lends
considerable credence to the potential and significance of the InvIT instrument.

The potential of InvIT instrument, conducive policy and regulatory framework, support of government and the
ambitious RE targets of India, all seem to be perfect pieces of a puzzle that can be stitched together and
subsequently contribute in a considerable manner to enable the transition of India to clean energy and assist in
meeting the targeted goals by 2030.

48 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

F ANNEXURE I :
COMPARATIVE ANALYSIS OF NEW AND
INNOVATIVE FINANCING INSTRUMENTS
CRITERIA

Type of Capital
raise (equity or
Debt)
ALTERNATIVE
INVESTMENTFUND (AIF)
Can be both equity or debt Debt
GREEN BONDS InvIT

Equity/hybrid

Sponsor/Issuer No specific requirements for No specific requirements a) Sponsor’s net worth

qualification the sponsor for the issuer, but are should be at least $13
generally raised by large mn (INR 100 Crs.)
organisations. b) The sponsor should
have a minimum
experience of at least 5
years and should have
completed at least 2
projects.

Sponsor/Issuer The sponsor shall have a No financial commitment, a) The sponsor must
Commitment continuing Interest in the however, issuer needs to mandatorily invest in
AIF of not less than 2.5% of fulfill the compliance 15% of the invit units.
the Corpus or $0.6 mn (INR requirements of b) Minimum lock-in
5 Crs.), whichever is lower. certification/regulation. period of sponsors: 3
years from the date of
listing

Placement/ Funds can only be raised by Funds can be raised by Funds can be raised by
Listing investors through private both private and public both private and public
placement. placement. placement.

Investment The fund cannot invest more Funds can only be invested a) An InvIT may only
restrictions than 25% of the investable in ‘Green sector’. SEBI, in invest in infrastructure
funds in a single investee its green bond regulation projects or in companies
company. has identified the following with more than 90% of
sectors where proceeds of its assets consisting of
green bond can be infrastructure projects.
invested: b) An InvIT may only
a) Renewable and invest in entities (Hold
sustainable energy cos) in which the InvIT
b) Clean transportation holds at least 51% equity
c) Sustainable water share capital.
management c) More than 80% of the
d) Climate change value of the InvIT Assets
adaptation shall be invested in
e) Energy efficiency operational and revenue
f) Sustainable waste generating projects.
management
g) Sustainable land use
h) Afforestation
i) Biodiversity conservation

49 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

F ANNEXURE I :
COMPARATIVE ANALYSIS OF NEW AND
INNOVATIVE FINANCING INSTRUMENTS
CRITERIA

Minimum
issuance size
ALTERNATIVE
INVESTMENTFUND (AIF)
No regulatory restrictions on
the minimum issuance size.
GREEN BONDS

No regulatory restrictions
on the minimum issuance
size, however, the average
InvIT

a) Minimum size of
issuance should be at
least $35 million (INR
size of green bond 250 Crs.)
issuances undertaken by b) Minimum value of the
Indian RE developers has assets comprising initial
been around $500 mn portfolio of assets of the
(INR 3,800 Crs.) InvIT should be at least
$70 million (INR 500
Crs.)

Open/close The fund has to be Fixed tenure InvITs are open-ended.

ended close-ended.

Listing AIF units may be listed on a Can be raised through InvITs can be listed or
stock exchange, subject to a private placement or unlisted.
minimum tradable retail investors
lot of $0.15 mn (INR 1 Cr.)

Dividend No specific distribution Coupons/interest is to be a. An InvIT is required to

distribution policy mandated by SEBI. paid periodically distribute at least 90% of
policy the net distributable cash
flows to its unitholders.
b. Dividends need to be
distributed twice a year
for publicly listed InvITs
and once for privately
listed InvITs.

Minimum Minimum Investment by an Offered in lots. Minimum a. For public placement,

investment investor is $0.15 mn (INR 1 investment may vary the minimum investment
Cr.) depending upon the size shall be $130 (INR
of the investment. 10,000).
b. For private placement,
the minimum investment
shall be $0.15 mn (INR 1
Cr.).

50 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

G ANNEXURE II : LEGAL & REGULATORY
FRAMEWORK OF InvITs

InvITs can be listed or unlisted instruments and are primarily governed by the SEBI Infrastructure Investment Trusts
Regulations, 2014 and subsequent amendments. Institutional investors and corporate entities can participate in
InvITs, thus providing a wider investor base (Bassi, 2019). Once the InvIT is set up, the sponsor can transfer future
projects to it in exchange for fresh capital, thus enabling continuous capital recycling and providing fresh equity for
the development of greenfield projects.

I. LAWS AND REGULATIONS GOVERNING InvITs

The key laws applicable to InvITs in India are as follows:

a. SEBI (Infrastructure Investment Trusts) Regulations, 2014

b. Preferential Issue Guidelines, Allotment and Trading Lot Guidelines

c. Indian Trusts Act, 1882

d. Registration Act and the Income Tax Act, 1961

e. Foreign Exchange Management Act (FEMA), 1999 and FEMA Regulations

The above-mentioned regulations largely concern registration of InvITs, minimum eligibility criteria, disclosures
required in an offer document/placement memorandum, rights and responsibilities of different parties,
investment conditions, related party transactions, borrowing, valuation of assets, public issue of InvITs, and exit
mechanisms for dissenting unit holders.

Over the years, these regulations have been amended to cover issues of debt securities, preferential issues of units
by InvITs, determination of bidding/allotment and trading lot size for InvITs, filing of placement memoranda,
guidelines for rights issue of units by listed and unlisted InvITs, minimum number and holdings of unit holders for
unlisted InvITs, and manner and mechanism for providing an exit option to dissenting unit holders.

51 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

G ANNEXURE II : LEGAL & REGULATORY
FRAMEWORK OF InvITs

A chronology of SEBI InvIT regulations and subsequent amendments is presented in Table 7, below.

2
TABLE 7. SEBI InvIT REGULATIONS AND SUBSEQUENT AMENDMENTS
DATE TITLE

Gazette notification of Securities and Exchange Board of India (Infrastructure

Sep 26, 2014
Investment Trusts) Regulations, 2014

May 11, 2016 Guidelines for Public Issue of Units of InvITs

Disclosure of financial information in offer document/placement memorandum for

Oct 20, 2016
InvITs

Online Filing System for Real Estate Investment Trusts (REITs) and Infrastructure
Jul 24, 2017
Investment Trusts (InvITs)

Guidelines for issuance of debt securities by Real Estate Investment Trusts (REITs)
Apr 13, 2018
and Infrastructure Investment Trusts (InvITs)

Guidelines for Preferential Issue of Units by Infrastructure Investment Trusts

Jun 05, 2018
(InvITs)

Jan 15, 2019 Guidelines for public issue of units of InvITs--Amendments

Guidelines for determination of bidding, allotment, and trading lot size for Real
Apr 23, 2019
Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs)

Guidelines for preferential issue of units and institutional placement of units by a

Nov 27, 2019
listed InvIT

Dec 24, 2019 Guidelines for filing of placement memorandum--InvITs proposed to be listed

Jan 17, 2019 Guidelines for rights issue of units by a listed Infrastructure Investment Trust (InvIT)

Guidelines for rights issue of units by an unlisted Infrastructure Investment Trust

Nov 04, 2020
(InvIT)

Requirement of minimum number and holding of unit holders for unlisted

Aug 04, 2021
Infrastructure Investment Trusts (InvITs)

Amendments to manner and mechanism of providing exit option to dissenting unit

Oct 05, 2021 holders pursuant to Regulation 22(5C) and Regulation 22(7) of SEBI (InvIT)
Regulations

Source: SEBI,USAID SAREP analysis

2
SEBI, (2014), InvIT regulations 2014 and subsequent amendments

52 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

G ANNEXURE II : LEGAL & REGULATORY
FRAMEWORK OF InvITs

II. INTERMEDIARIES AND PARTIES OF InvITs - SPONSOR,

TRUSTEE, INVESTMENT MANAGER, PROJECT MANAGER,
VALUER, AUDITOR
A typical InvIT structure may involve myriad entities with diversified roles; however, the key parties of an
InvIT are Sponsor, Trustee, Investment Manager, and Project Manager. Each party in an InvIT structure has
defined roles and responsibilities, described in Section 1.

III. REQUIREMENTS – ELIGIBILITY, SUBSCRIPTION LIMITS

An InvIT may be listed either through a private placement or a public issue. Some of the key requirements
governing these issues are listed in Table 8, below.

TABLE 8. InvIT REQUIREMENTS

Features Public Listed Private Listed Private Unlisted

Mandatory within three
Not required (may
years of registration date
choose to list its units
(through private
Mandatory within three on stock exchanges,
placement) (can migrate
Listing years of registration date after complying with the
to unlisted platform on
(through public issue) applicable requirements
obtaining the approval of
for a privately placed
more than 90% of unit
listed InvIT)
holders by value)

USD 134.1 (INR10,000)–

USD 201.1 (INR 15,000)
USD 0.14 Mn (INR 10
(earlier USD 670.2 or INR
Trading lot size Mn) USD 0.27 Mn (INR NA
50,000 ) and trading lot of
20 Mn) in certain cases
one unit (earlier 100 to
2,500 units)

Within 30 days of date of

Timeline for listing Within 12 days of IPO NA
allotment

Post-issue capital calculated at offer price to be held by

public:

• Where the post issue capital is less than USD 214.5

Mn (INR 16 Bn)– 25% of the outstanding InvIT units
or USD 33.5 Mn (INR 2.5 Bn), whichever is higher.
Minimum public
• Where the post issue capital is between USD 214.5
floating
Mn (INR 16 Bn) to USD 536.2 Mn (INR 40 Bn) –
USD 53.6 Mn (INR 4 Bn).
NA
• Where the post issue capital is USD 536.2 Mn (INR
40 Bn) or more - minimum 10% of the outstanding
InvIT units, which needs to be increased to be 25%
within three years of listing

53 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

G ANNEXURE II : LEGAL & REGULATORY
FRAMEWORK OF InvITs

TABLE 8. InvIT REQUIREMENTS

Institutional investors and

other investors, whether
Indian or foreign, with the
following allocation: Institutional investors
Institutional investors and
and corporate bodies,
Investors corporate bodies,
• Not more than 75% to whether Indian or
whether Indian or foreign
institutional investors foreign

• Not less than 25% to

other investors

• Initial portfolio of • Initial portfolio of

assets >= USD 67 Mn assets>= USD 67 Mn
(INR 5 Bn) (INR 5 Bn)

• Public Issue >= USD • Private placement>= Not less than 80% of
33.5 Mn (INR 2.5 Bn) USD 33.5 Mn (INR the value of InvIT assets
Basic listing
2.5 Bn) shall be invested in
requirement
• Minimum 80% of the eligible infrastructure
value of the InvIT • Minimum 80% of the projects
assets shall be invested value of InvIT assets
in completed and shall be invested in
revenue generating eligible infrastructure
infrastructure projects projects

May be invested in:

May be invested in:
May be invested in:
• Under-construction
• Listed or unlisted
infrastructure projects • Listed or unlisted
debt of companies
( 10% of value of debt of companies for
for infra sector
InvIT assets) infra sector
• Equity shares of
• Listed or unlisted debt • Equity shares of listed
listed infra
Un-invested funds of companies for infra infra companies
companies
sector equity shares of
listed infra companies • Government
• Government
securities
securities
• Government securities
• Money-market
• Money-market
• Money-market instruments, liquid
instruments, liquid
instruments, liquid mutual funds
mutual funds
mutual funds

Five investors (other than

the sponsor(s), its related Five investors (other than
parties, and its associates. the sponsor(s), its
Minimum number
20 investors (minimum Also, minimum related parties, and its
of investors and
subscription of 90% of the subscription of USD 0.13 associates. Also,
subscription
issue size required) Mn (INR 10 Mn) minimum subscription
required
required. USD 3.4 Mn of USD 0.1 3Mn (INR
(INR 250 Mn) in case of 10 Mn) required
specified criteria

54 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

G ANNEXURE II : LEGAL & REGULATORY
FRAMEWORK OF InvITs

Maximum number
No limit
TABLE 8. InvIT REQUIREMENTS

1,000 20
of investors

No specified limit (5
Maximum
unit holders must hold
investment by a 25% of units 25% of units
at least 25% of total
single investor
InvIT units)

70% subject to conditions

70% subject to conditions
as below:
as below:

• Credit rating of AAA

• Credit rating of AAA
or the equivalent
or equivalent
• No limit
• Utilize the funds only
• Utilize the funds only
for the acquisition or • To be specified
for the acquisition or
Leverage limit development of under the trust
development of
infrastructure project deed and in
infrastructure project
consultation with
• Have a track record investors
• Have a track record of
of at least 6
at least 6 continuous
continuous
distributions
distributions
• Obtain approval of 75%
• Obtain approval of
of (unrelated) unit
75% of (unrelated)
holders
unit holders

Required if leverage is Required if leverage is Required if leverage is

Credit rating
greater than 25% greater than 25% greater than 25%

Declared and made once Declared and made once Declared and made
every 6 months in every FY every FY (minimum of once every FY
Distribution
(minimum of 90% of net 90% of net distributable (minimum of 90% of net
distributable cash flows) cash flows) distributable cash flows)

Half-yearly valuation of
assets is required. If Full valuation must be Full valuation must be
Valuation borrowings exceed 49% conducted not less than conducted not less than
threshold, valuation shall once every FY once every FY
be conducted quarterly

Source: USAID SAREP analysis

55 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

G ANNEXURE II : LEGAL & REGULATORY
FRAMEWORK OF InvITs
Tax Treatment

Tax exemptions for sovereign wealth funds: Complete tax exemption from long-term capital gains, dividends, and
interest on infrastructure investments made before March 31, 2024, with a lock-in period of 3 years

a) Tax on dividend income:

1. The dividend received by a business trust from an SPV, which was earlier tax exempt
subject to the business trust meeting the prescribed conditions, has now been exempted
in the hands of the business trust unconditionally. The dividend will now be directly
taxed in the hands of the unit holders

2. While the dividend is being taxed in the hands of the unitholders, business trusts are still
required to deduct 10% tax at the source for residents, and at the applicable rate for
non-residents when distributing dividend income

b) Tax on interest income: Interest income is taxable in the hands of unit holders as if
they received the interest directly.

1. Withholding tax on interest income is 10 percent for residents and 5 percent for
non-residents/offshore investors; benefits under DTAA, if any, are available
Many intermediaries play key roles in listing the units of an InvIT:

a) Merchant Bankers: An InvIT is permitted to file the Draft Offer Document or

Placement Memorandum only through a merchant banker. Key responsibilities include:

1. Exercise due diligence, and file a due-diligence certificate along with a copy of the
Draft Offer Document (in case of public listing)

2. Liaison with SEBI and the stock exchanges throughout the listing process, to obtain
the requisite approvals

3. Assist with and coordinate road shows for marketing of the issue in public offers

4. Completion of post-issue obligations, for instance, filing monitoring reports with

SEBI, redressing investor grievances, and paying interest to applicants

b) Registrar: This intermediary, registered with SEBI, is responsible for:

1. Accepting application forms from investors in the issue and processing them through
syndicate members of Self Certified Syndicate Banks (SCSBs)

2. Coordinating the process for allotment of units of the InvIT and refunding the
subscription amount when the units are not allotted to the applicant

3. Maintaining physical and electronic bid data for bids received, including a record of
application forms received

A registrar may also be appointed during a private-placement process.

56 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

G ANNEXURE II : LEGAL & REGULATORY
FRAMEWORK OF InvITs

c) Syndicate members: Collect application forms from applicants during the issue period;
enter details into the electronic bidding systems of stock exchanges; undertake preliminary
verification prior to sending application forms to the registrar

d) Public-issue banks: Maintain public offer accounts for the collection of the application
money from investors; will not typically be involved in a private placement

e) Escrow-collection banks: Act as escrow agents for application money received as a

part of the public issue from non-ASBA investors; also handle refunds of excess
amounts received from non-ASBA investors

f) Credit-rating agencies: Assign a credit rating to units of the InvIT, in such manner as
prescribed by InvIT regulations. Credit ratings are required if aggregate consolidated
borrowings and deferred payments of the InvIT exceed 25 percent of the value of
InvIT assets

g) Advertising agency: Responsible for advertising and publicity and providing information
to merchant bankers, to enable them to submit compliance certificates to SEBI as specified
under InvIT guidelines. No advertisements can be issued in the case of a private placement

IV. DEBT AND BORROWING – SECURITIES AND LIMITS

An InvIT with units listed on a recognized stock exchange can issue debt securities in the manner specified by SEBI.
For issuance of debt securities, an InvIT shall follow the provisions of SEBI Issue and Listing of Debt Securities
(ILDS) Regulations. These debt securities shall be listed on a recognized stock exchange.

An InvIT, its holding companies and SPVs are permitted to have consolidated borrowings and deferred payments
of up to 70 percent of the value of InvIT assets. In the event the borrowing and deferred payments exceed 25
percent of InvIT assets, and are up to 49 percent of InvIT assets, the InvIT is required to obtain:

a) A credit rating from a credit-rating agency registered with SEBI

b) Approval of unit holders

If borrowings and deferred payments exceed 49 percent of InvIT assets and up to 70 percent of InvIT assets, the
InvIT is required to:

a) Obtain credit ratings of AAA or the equivalent for its consolidated borrowings
and proposed borrowings, from a credit-rating agency registered with SEBI

b) Utilize the funds only for the acquisition or development of infrastructure projects

c) Have a track record of at least 6 continuous distributions in the years preceding the FY of
the borrowing

d) Obtain the approval of unit holders

57 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

G ANNEXURE II : LEGAL & REGULATORY
FRAMEWORK OF InvITs
V. LISTING AND PRIVATE PLACEMENT – PROCESS,
REQUIREMENTS, RESTRICTIONS

The processes, requirements, and restrictions for listing and private placement are shown below in
Figures 19 and Figure 20.

FIGURE 19 : LISTING OF PUBLIC InvITs

Pre-Filing of the Draft Offer Document

• Appointment of Merchant Bankers and Legal Counsels
• Kick-off meeting : Senior management provides an overview of the Sponsor & its business to the various
intermediaries & InvIT Timelines
• Identification of the InvIT Assets, the Trustee, the Investment Manager and the Project Manager
• Preparation of data room and commencement of due diligence exercise
• Submission of application for grant of certification of registration by SEBI
• Execution of structure related transaction documents

Filing of the Draft Offer Document

• Execution of the Issue Agreement & execution of standard certificates are provided by the Trustee,
the Investment Manager and the Sponsor and executed comfort letter is provided by the auditors
• Filing of the Offer Document with SEBI along with due diligence certificate by Merchant Bankers
• Filing of application with Exchanges for grant of in-principle approval for listing & trading of units

SEBI Review and Receipt of Final SEBI Observations

• Replying to the interim observations received from SEBI

• Receipt of final observations from SEBI

Post Receipt of Final SEBI Observations and Filing of the Offer Document

• Filing reply to final observations received from SEBI along with updated Draft Offer Document
• Receipt of SEBI approval for the updated Draft Offer Document
• Execution of escrow agreement and syndicate agreement
• Execution of updated standard certificates and comfort letter
• Filing of the Offer Document with SEBI and the Stock Exchanges and obtaining approval from
SEBI and designated Stock Exchange

58 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

G ANNEXURE II : LEGAL & REGULATORY
FRAMEWORK OF InvITs
Issue Period

• Announcement of the floor price or price band at least 5 working days before the Issue Opening Date or
Issue Price, in case of a fixed price Issue
• Opening of the Issue at least 5 working days after the filing date of the Offer Document with SEBI
• Opening of the bidding period for subscription by all investors except Anchor Investors
• Closure of the Issue

Post-Issue Period
• The Registrar shall receive electronic bid details from Stock Exchanges
• The Investment Manager, in consultation with the Merchant Bankers to determine the Issue Price
• Finalization of the Issue Price & filing of final offer & documentation with SEBI and Exchanges
• Registrar is required to submit final basis of allotment to the designated Stock Exchange
• Fund transfer instructions to collection banks & SCSBs for credit of funds into public issue account
• Investment Manager to allot the units and credit of units to the successful bidders and commencement
of trading

FIGURE 20. PRIVATE PLACEMENT OF InvITs

Pre-Filing of the Placement Memorandum

• Appointment of Merchant Bankers and Legal Counsels

• Kick-off meeting: Senior management provides an overview of the Sponsor & its business to the
Merchant Bankers and the legal counsels and the InvIT Timelines
• Identification of the InvIT Assets, the Trustee, the Investment Manager and the Project Manager
• Preparation of data room and commencement of due diligence exercise
• Submission of application for grant of certification of registration by SEBI
• Execution of structure-related transaction documents

Filing of the Placement Memorandum

• Filing of application with the Stock Exchanges for grant of in-principle approval for listing and
trading of units
• Filing of Placement Memorandum with SEBI, at least 5 days prior to the opening of the Issue
• Sending the Placement Memorandum to investors along with the application form

Post Filing of Placement Memorandum

• Opening and closing of the Issue

• Closing of the Share Purchase Agreement or the Asset Purchase Agreement, as applicable
• Sending the Placement Memorandum to investors along with a confirmation of allocation of units

SOURCE: USAID SAREP ANALYSIS

59 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

G ANNEXURE II : LEGAL & REGULATORY
FRAMEWORK OF InvITs
VI. TRANSACTION DOCUMENTS – SEBI REQUIREMENTS,
TRANSACTION AGREEMENTS
Key parties and intermediaries may enter into multiple agreements during the InvIT process. Such agreements
(Cyril Amarchand Mangaldas, 2020) are defined as transaction documents, and are broadly classified into two
categories:

a) Structure-related documents: These relate to the setting up of the InvIT, allocation of

responsibility to various parties, transfer of assets by the sponsor, the mechanism for utilization
of cashflows, and distribution of dividends to unitholders.

1. Trust deed: The constitutional document of the InvIT, entered between the sponsor,
the InvIT and the trustee, prior to registration of the InvIT with SEBI. The deed
highlights the objectives of the InvIT and the powers, functions and duties of the
trustee and investment manager

2. Investment management agreement: This is entered into between the trustee and
investment manager prior to registration of the InvIT with SEBI. It defines the powers,
functions, duties, and responsibilities of the investment manager (as per applicable
laws and regulations)

3. Project implementation and management agreement: This is entered into

between the trustee, investment manager, project manager and project SPVs, prior to
registration of the InvIT with SEBI. It sets out the functions and duties of the project
manager (as per applicable laws and regulations)

4. Shareholder agreements: If the InvIT does not hold 100% of the holding company
or project SPV, a shareholder agreement may be required between the InvIT, shareholders,
or partners of the SPV/holding company. Typically, this agreement is entered
prior to investment in the holding company or SPV

5. Share-purchase agreement or asset-purchase agreement: This transfers the

holding company or project SPVS from the sponsor to the trustee. It is executed by
the sponsor, trustee, investment manager and holding company/project SPVs prior to
filing other Draft Offer Document/Placement Memorandum, and its closing should
occur prior to the allotment of units in the public issue/private placement

6. Debenture subscription agreement/loan agreement: This establishes an efficient

mechanism for upstream cash flows of project SPVs to the InvIT, for distribution to
unit holders. It should be executed prior to the filing of Draft Offer Memorandum/Placement
Memorandum with SEBI.

Shared Services, Intellectual Property, Non-Compete, Deed of Right of First Offer/Refusal, and
Non-Compete agreements may be executed based on a factual assessment of the relationship
between the InvIT and its sponsor.

InvITs are required to pay non-refundable filing fees of 0.1% in case of initial offer and 0.05% in case
of rights issue of the total issue size, including green shoe option, at the time of filing of draft
placement memorandum or offer letter with respect to private placement.

60 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

G ANNEXURE II : LEGAL & REGULATORY
FRAMEWORK OF InvITs

b) Listing-related documents

1. Issue agreement/placement agreement: This is entered into between merchant

bankers, sponsor, investment manager, and trustee acting on behalf of the InvIT, prior
to filing the final offer document. It defines, among other things, the role and responsibility
of merchant bankers, conditions precedent to merchant banker obligations,
representations and warranties from the trustee, details of the indemnity provided by
the investment manager, and provision for termination of merchant banker engagement

2. Registrar agreement: This is entered into by the investment manager, trustee, and
registrar, and sets out the rights and responsibilities of the registrar during the listing process

3. Underwriting agreement: This is entered into by the investment manager, trustee,

and underwriters after determination of the price and allocation of units of the InvIT,
but prior to the filing of the final offer document. It broadly defines the responsibilities
of underwriters and specifies that the underwriters agree to ensure payment with
respect to units allocated to unit holders. In the event of any default in payment, the
underwriter is required to procure purchasers for or purchase the units, to the extent of
the defaulted amount.

Advertising agency and escrow agreements may also be executed during the listing process.

VII. INVESTORS AND THEIR ROLES – INSTITUTIONAL, ANCHOR

AND RETAIL
a) Investors contribute funds to the InvIT, which allows them to generate returns. An InvIT must
distribute 90% of its total net cash flow to investors (as per regulations)

b) A wide variety of investors can participate in an InvIT, including institutional investors3 , corporate
bodies (Indian or foreign), and retail investors, subject to restrictions governing each category.
There also exists a specific category of investors called anchor investors.

3
Qualified Institutional Buyers (QIBs) (Mutual fund, Venture Capital fund, AIFs and foreign Venture Capital investor registered with SEBI Foreign
portfolio investor, other than individuals, corporate bodies and family offices, Public financial institution, Scheduled commercial bank, Multilateral
and bilateral development financial institution, State industrial development corporation, Insurance company, Provident fund, Pension fund,
systemically important non-banking financial companies etc.)
AND
Family trust or systematically important NBFCs registered with the RBI or intermediaries registered with SEBI, all with networth of more than
USD 67 Mn (INR 5 Bn)

61 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

G ANNEXURE II : LEGAL & REGULATORY
FRAMEWORK OF InvITs

c) Anchor Investors: These are Qualified Institutional Buyers (QIBs) applying to invest USD 1.34
Mn (INR 100 Mn) or more through the book-building process. Up to 60 percent of the QIB
group can be allocated to anchor investors. Allocation to anchor investors is on a discretionary
basis and subject to the following:

1. A minimum of 2 anchor investors for allocations up to USD 33.5 Mn (INR 2.5 Bn)

2. A minimum of 5 anchor investors for allocations of more than USD 33.5 Mn (INR 2.5 Bn)

VIII. DISCLOSURE REQUIREMENTS

Disclosure requirements for public listed InvITs are governed by InvIT regulations and InvIT guidelines. However,
these requirements continue to evolve, based on (among other things) regulatory evaluation and feedback from
stakeholders and prospective investors.

In addition to customary areas such as the business and industry of the InvIT, risk factors (internal and external to
the InvIT), financial statements, and management discussion and analysis of financial conditions and results of
operation, other key disclosure requirements under InvIT regulations include:

a) Comprehensive details pertaining to the sponsor, investment manager, project manager,

trustee, and other parties

b) Brief background of the InvIT, including InvIT structure and description and details of InvIT
assets or any arrangement pertaining to underlying InvIT assets

c) Capital structure of InvIT assets, including any borrowing or deferred payments and the
borrowing policies

d) Details of any related party transactions and the procedure for dealing with such transactions

e) Disclosures on the title of InvIT assets, including material litigations pertaining to InvIT assets,
the status of approvals with respect to InvIT assets and approvals periodically required for InvIT
assets

f ) Details of material litigations and regulatory actions pending against the InvIT, the sponsor, the
investment manager, the project manager, the trustee, or their associates

g) Comprehensive details on the rights of unit holders

h) A full valuation report, auditor report, and any sector-specific reports

62 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

G ANNEXURE II : LEGAL & REGULATORY
FRAMEWORK OF InvITs

IX. CORPORATE ACTIONS

The corporate approvals required for setting up an InvIT include:

a) Approval of the board of directors of the sponsor for setting up the InvIT, appointing the
trustee, and filing the application with SEBI for registration of the InvIT

b) Approval of the board of directors of the sponsor and investment manager for issuing units of
the InvIT

c) Approval of the board of directors (or duly constituted committee thereof ) of the investment
manager for various activities related to the issue of units, such as approval of the Draft Offer
Document, Offer Document, Final Offer Document, or Placement Memorandum (as the case
may be) and execution of various agreements in relation to the transaction

These authorizations are required at various stages in the transaction, including at the time applying to SEBI for
registration of the InvIT, filing the Draft Offer Document, the Offer Document and the Final Offer
Document/Placement Memorandum, and listing or allotting units on stock exchanges.

Each sponsor requires approval from its board of directors for the transfer of the initial portfolio assets.
Depending on the materiality of assets being transferred by the sponsor, shareholder approval may also be
required. The transfer of initial portfolio assets may also require third-party approvals, depending on regulatory
restrictions, if any, and contractual arrangements entered by the sponsor. Such approvals include those related to
transfer restrictions applicable to the assets or project SPVs, imposed by relevant regulatory authorities;
restrictions under licenses and approvals applicable to the assets or project SPVs; restrictions under financing
agreements; and restrictions imposed by private equity investors, if any, on the sponsor or project SPVs.

X. DISTRIBUTION REQUIREMENTS

Once an InvIT is set up, it needs to ensure the distribution of at least 90 percent of its net distributable cash flows
to unit holders. Project SPVs are also required to distribute at least 90 percent of their net distributable cash flows
to the InvIT, or, if applicable, the holding company.

a) In case of a two-tiered structure of an InvIT, the holding company is required to distribute to

the InvIT:

1. 100 percent of the cash flows received by it from project SPVs

2. 90 percent of the net distributable cash flows generated by the holding company

b) Such distributions shall be declared and made:

1. Once every six months in every financial year, in case of public-offered InvITs
2. Once per year, in case of privately placed InvITs, and not later than 15 days from the
date of declaration
In addition to the periodic distributions specified above, if any infrastructure asset is sold by the InvIT, at least 90
percent of the proceeds of this sale must be distributed to unit holders, unless such proceeds are proposed to be
re-invested in other infrastructure assets within a period of one year.

63 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

G ANNEXURE II : LEGAL & REGULATORY
FRAMEWORK OF InvITs

XI. TYPES OF UNIT OFFERINGS

A listed InvIT can undertake the following types of unit offerings:

1. Follow-on public issue

2. Preferential allotment
3. Qualified institutions placement
4. Rights issue
5. Bonus Issue
6. Offer for sale, or any other mechanism specified by SEBI.

However, other than for preferential issues, extant InvIT regulations do not provide operational rules or
guidelines for undertaking such offerings of units by InvITs.

a) A preferential issue is a subsequent issue of units undertaken on a private placement basis to

select institutional investors by an InvIT that has listed its units pursuant to an initial offer. The
requirements applicable to a preferential issue of units by a listed InvIT are provided in the
Preferential Issue Guidelines.

b) Eligibility conditions for undertaking a preferential issue include:

1. The units of the InvIT being offered in the preferential issue should be of the same
class as the units issued in the initial offer by the InvIT, and be listed on a recognized
stock exchange for at least 6 months preceding the date of issuance of notice to the unit
holders for a resolution authorizing the preferential issue

2. The preferential issue should be approved by unit holders through a resolution. Votes
in favor of the preferential issue should be at least one and a half times votes cast
against the preferential issue

3. The InvIT should comply with the conditions for continuous listing and disclosure
obligations in InvIT regulations and the Continuous Disclosures Circular, and should also
comply with minimum public unit-holding requirements prescribed in InvIT regulations

4. Preferential issues by InvITs should be separated by a six-month interval

5. Not less than two, and not more than 1,000, investors can participate in preferential
issues of units by an InvIT in one financial year

6. Allotment of units in a preferential issue cannot be made, directly or indirectly, to

parties to the InvIT or their related parties. However, units may be allotted to a
sponsor only in order to enable the sponsor to meet minimum unit-holding
requirements under InvIT regulations

7. Preferential issues of units must be priced above a floor price fixed with reference to
the relevant date. This floor price is the average of the weekly high and low of the closing
prices of the listed units of the InvIT during the two weeks preceding the relevant date

64 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

H ANNEXURE III – VALUATION
APPROACH FOR InvIT

An illustrative valuation using financial projections of 25 years (asset life) for arriving at Income Approach
DCF Valuation method for 100 MW solar power project is presented in this section. In order to arrive at
the valuation, following parameters have been assumed to create financial projections for 25 years of 100
MW solar power project. The assumptions considered for valuation and financial projections are presented
in Table 9 and Table 10, respectively.

TABLE 9. ASSUMPTIONS FOR VALUATION

PARTICULARS UNIT DETAILS

Project Capacity Mw (DC) 100

Project Cost USD (INR) USD 50.7 Mn (INR 3.78 Bn)

Project Tenure Years 25.00

Project Type GM/RT Ground Mount

Start of Construct date April 1, 2021

Construction Time months 12 months

Project COD date March 27, 2022

Project PLF % 19.55%

Tariff USD (INR)/ Kwh USD 4.02 cents/(INR 3.00)

Degradation % 0.70%

Project Leverage % 70.00%

Cost of Debt % 8.10%

Tenure of Debt Years 18 Years with 1 year

moratorium

65 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

H ANNEXURE III – VALUATION APPROACH FOR InvIT

Source: USAID SAREP analysis

As can be seen from Table 13, valuation using the InvIT approach is higher than the one arrived at using conventional M&A approach. It may be noted that the above valuations have been arrived at for standalone assets.

66 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV 67 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV
I ANNEXURE IV – OFFER DETAILS
FOR PUBLIC LISTED InvITs

INDIGRID INITIAL OFFER:

The details of the initial IndiGrid offer (Indigrid, 2017) are presented in Table 11, below.

TABLE 11 DETAILS OF INDIGRID InvIT

Offer size USD 302 Mn (INR 22.5 Bn) (224,996,373 Units)

Issue open date May 17, 2017

Issue close date May 19, 2017

Issue price USD 1.34 (INR 100)/Unit

Use of proceeds Loan to SPVs for repayment of debt

Anchor investor Deutsche Global Infrastructure Fund, Credit Suisse (Singapore), Reliance Nippon Life
Insurance Company, Copthall Mauritius Investment, Edelweiss Tokio Life Insurance
Company

PGInvIT INITIAL OFFER:

The details of the initial PGInvIT offer are presented in Table 12, below.

TABLE 12. DETAILS OF PGCIL InvIT

Offer size Fresh Issue -USD 669 Mn (INR 49.9 Bn) (499,348,300 Units)

Offer for Sale -USD 367 Mn (INR 27.4 Bn) (274,150,800 Units)

Issue open date April 29, 2021

Issue close date May 03, 2021

Issue price USD 1.34 (INR 100)/Unit

Use of proceeds Loan to SPVs for repayment of prepayment of debt (only fresh issue)

Anchor investor CPPIB, SBI, HDFC, NPS Trust, Schroder Asian, Fidelity Funds, TATA Insurance, ICICI
Prudential, TATA Funds, UTI, Canara HSBC Oriental Bank of Commerce Life Insurance,
Edelweiss Tokio, and others

68 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

IH ANNEXURE IV – OFFER DETAILS
FOR PUBLIC LISTED InvITs

INITIAL OFFER DETAILS

The details of the initial Virescent InvIT offer are presented in Table 13 below.

TABLE 13. DETAILS OF VIRESCENT InvIT

Offer Size USD 61.7 Mn (INR 4.6 Bn) (460,000,000 Units)

Issue open date September 27, 2021

Issue close date September 28, 2021

Issue price USD 1.34 (INR 100)/Unit

Use of proceeds Refinancing existing loans and expansion strategies

Anchor investor Alberta I8nvestment Management Corporation (AIMCo)

69 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

J ANNEXURE V – CONSULTANT
REFERENCES

For the past InvIT transaction, the sponsor entities have employed the services of the following service
providers:

* Merchant bankers
* Legal consultants
* Technical consultants
* Rating agents
* Trustee
* Valuer
* Registrar and Unit Transfer agent

An association of Indian InvITs comprising of current and potential InvITs in India is also in place. Further
details are available at - https://invitassociation.in/

70 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

K ANNEXURE VI – REFERENCES
1. Bassi, Sudhir, Gupta, Navodita, Shah, Sneh and Doshi, Barkha, Khaitan & Co. (2019), SEBI relaxes norms for
INVITS and REITS to widen investor base-
https://www.khaitanco.com/thought-leadership/sebi-relaxes-norms-for-INVITS#:~:text=The%20Government
%20of%20India%20also%20introduced%20a%20tax,in%20a%20bid%20to%20attract%20issuers%20and%20inves
tors.

2. Bishnoi, Anubhuti, Economic Times (2021), 2030 renewable energy target: Panel to be set up soon for ‘Mission
500GW’ -
https://economictimes.indiatimes.com/industry/renewables/2030-renewable-energy-target-panel-to-be-set-u
p-soon-for-mission-500gw/articleshow/88267104.cms?utm_source=contentofinterest&utm_medium=text&ut
m_campaign=cppst

3. Buckley, Tim and Trivedi Saurabh, IEEFA press release (2021), Global capital mobilizing for India’s D500bn
renewable energy infrastructure opportunity -
https://ieefa.org/ieefa-global-capital-mobilising-for-indias-500bn-renewable-energy-infrastructure-opportunity/

4. CRISIL Limited (2019), Rating criteria for REITs and InvITs

-https://www.crisil.com/mnt/winshare/Ratings/SectorMethodology/MethodologyDocs/criteria/REITs%20an
d%20InVITS%20internal%20criteria.pdf

5. Cyril Amarchand Mangaldas (2020), De’constructing InvITs and REITs 2nd Edition -
https://www.cyrilshroff.com/wp-content/uploads/2020/10/Deconstructing-InvITs-REITs-NEW-11-oct.pdf

6. GriHub, (2020), InvITs: The next big Infrastructure story of India?

-https://www.griclub.org/news/infrastructure/invits-the-next-big-infrastructure-story-of-india_1357

7. Garg Shreyas, Jain Rishabh, Sidhu Gagan, CEEW (2021), Financing India’s Energy Transition Through
International Bond Markets

8. IEA (2021), India Energy Outlook 2021 - https://www.iea.org/reports/renewables-2021

9. IEEFA (2021), Funding Requirements and Avenues for Three Leading Energy Companies -
http://ieefa.org/wp-content/uploads/2021/10/Funding-Requirements-and-Avenues-for-Three-Leading-Energ
y-Companies_October-2021.pdf

10. IMD (2021), World Competitiveness Yearbook 2021 -

https://www.imd.org/centers/world-competitiveness-center/rankings/world-competitiveness/

11. IndiGrid, (2017), InvIT Final offer document (IPO), Preferential issue and Rights issue -
https://www.indigrid.co.in/wp-content/uploads/2021/12/IGT-Final-Offer-Document.pdf

12. IndiGrid, (2021), IndiGrid Investor Presentation Q2 FY22 Results -

https://www.indigrid.co.in/wp-content/uploads/2021/10/Investor-Presentation.pdf

13. Invest India, (2021), PM Gatishakti Master Plan -

https://www.investindia.gov.in/team-india-blogs/pm-gati-shakti-master-plan

14. IRDAI, (2021), Investments in Debt Securities of InvITs and REITs -

https://www.irdai.gov.in/admincms/cms/whatsNew_Layout.aspx?page=PageNo4454&flag=1

71 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

K ANNEXURE VI – REFERENCES
15. Karnik, Gaurav and Khetan, Sandip, EY (2021), REITs and InvITs could drive the future of Indian infrastructure. -
https://www.ey.com/en_in/real-estate-hospitality-construction/reits-and-invits-could-drive-the-future-of-india
n-infrastructure

16. KPMG, India (2021), Taxation of cross-border mergers and acquisitions -

https://home.kpmg/xx/en/home/insights/2021/03/india-taxation-of-cross-border-mergers-and-acquisitions.
html

17. National Power Portal - https://npp.gov.in/dashBoard/cp-map-dashboard

18. NITI Aayog, (2021), National Monetisation plan -

https://www.niti.gov.in/sites/default/files/2021-08/Vol_I_NATIONAL_MONETISATION_PIPELINE_23_Aug
_2021.pdf

19. ORF Issue Brief, (2020), Financing India’s Renewable Energy Vision -
https://www.orfonline.org/wp-content/uploads/2020/01/ORF_IssueBrief_336_RenewableEnergy.pdf

20. PGInvIT, (2021), Offer Document - Final Offer Document.pdf (pginvit.in)

21. Reserve Bank of India (RBI), (2019), Monetary & credit information review, Volume XV, Issue 4 –
https://rbidocs.rbi.org.in/rdocs/Publications/PDFs/MCIR01112019FLE58B602257084710B99A1F52198EA34
E.PDF

22. Sanghai, Sunil, (2020), Better late than never! Investors finally lap up Indian REITs & InvITs -
https://economictimes.indiatimes.com/markets/stocks/news/better-late-than-never-investors-finally-lap-up-in
dian-reits-invits/articleshow/77350999.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign
=cppst

23. SEBI, (2014), InvIT regulations 2014 and subsequent amendments -

https://www.sebi.gov.in/legal/regulations/sep-2014/securities-and-exchange-board-of-india-infrastructure-inve
stment-trusts-regulations-2014-last-amended-on-august-03-2021-_43181.html

24. Securities and Exchange Board of India (SEBI) (2020), Guidelines for rights issue of units by an unlisted
Infrastructure Investment Trust (InvIT) -
https://www.sebi.gov.in/legal/circulars/nov-2020/guidelines-for-rights-issue-of-units-by-an-unlisted-infrastruct
ure-investment-trust-invit-_48082.html

25. SEBI, (2022), Registered Infrastructure Investment Trusts-

https://www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognisedFpi=yes&intmId=20

26. Shah, Harsh. (2021), InvIT: An Introduction -

https://ctconline.org/wp-content/uploads/pdf/2021/seminar-presentation/other/3-8-2021-Harsh-Shah.pdf

27. Shah, Harsh (2018), InvITs: Game changer for Infrastructure Financing in India -
https://www.indigrid.co.in/wp-content/uploads/2021/12/Infraline-November-Issue-Harsh-Shah-Article.pdf

28. Sharma Shalini (2022), India to add 29.33 GW of hydropower through 70 HEPs by FY30: RK Singh -
https://psuwatch.com/india-to-add-29-33-gw-of-hydropower-through-70-heps-by-fy30-rk-singh

72 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

K ANNEXURE VI – REFERENCES
29. Singh, R.K. (2021) 'Accelerating Citizen-Centric Energy Transition’, Times of India.
(https://timesofindia.indiatimes.com/business/india-business/renewable-energy-sector-in-india-gets-70-billion-i
nvestment-in-7-years-singh/articleshow/83840238.cms)

30. Sinha, Ruchir and Bhushan, Shreyas, Touchstone partners (2020), InvITs: Gamechanger in the Indian
Infrastructure story- https://touchstonepartners.com/wp-content/uploads/2020/11/InvITs.pdf

31. UNESCAP (2019), Financing sustainable Infrastructure development in South Asia: The case of Asian
infrastructure Investment bank (AIIB) -
https://www.unescap.org/sites/default/files/Policy%20Brief%20AIIB_Oct19.pdf

32. VRET, (2021), Offer Document -

https://virescent.co.in/wp-content/uploads/2021/10/20210928223911_virescent_renewable_energy_trust_fi
nal_placement_memorandum.pdf

33. PGInvIT, (2021), Investor Presentation H1 FY2022 -

https://www.pginvit.in/uploads/c7b1db39-4775-44fa-9d7a-2ae562d16fcd/Investors_Presentation_on_H1_FY
_2022_Financial_Results_of_PGInvIT.pdf

34. Wasnik, Anurag, NITI-Aayog (2021)

-https://energy.economictimes.indiatimes.com/news/renewable/opinion-indias-transition-to-a-clean-energy-sy
stem/88247507

For currency conversion across document 1 USD = INR 74.6 has been used

73 | AN INVIT(E) TO RENEWABLES GROWTH IN INDIA USAID.GOV

FOR MORE INFORMATION, CONTACT:

USAID/India Contracting Officer’s Representative:

Anurag Mishra

SAREP Chief of Party:

Gaurav Bhatiani