Mumbai: Next year is expected to see more than Rs 3.5 lakh crore monetization of assets through infrastructure investment trusts (InvITs) and real estate infrastructure trusts (REITs), said on Thursday a national credit rating agency. This is a big step when you consider that only Rs 2.1 lakh crore of assets were floated through the newly created routes, Icra said.
The good growth will be supported by the track record of the entities, which have already launched such structures, enabling regulatory developments and focusing on attracting infrastructure investments, he said.
The agency said a constraint was removed with the recognition of InvITs and REITs as borrowers under the SARFAESI Act, and added that lenders to these trusts will now have legal enforcement options. adequate.
In addition, the Insurance Regulatory and Development Authority of India (Irdai) recently authorized insurers to invest in debt securities of InvIT and REIT rated AA and above as part of their approved investment, which is a testament to the comfort a growing number of lenders as well as investors around such structures, the agency said.
The clarifications on the tax-exempt nature of the dividend distribution from these trusts (under certain conditions) also led to them being viewed more favorably, he added.
“The raising of capital by these trusts is also facilitated by the favorable view that investors have the potential for long-term income generation from these infrastructure and real estate assets in the country,” said Shubham Jain, Head of Icra Group and senior vice president.
In the real estate business, there are various developers and asset managers who have regularly built up large portfolios of REIT ready assets, which can be monetized through this route. Among these portfolios, assets with a value greater than Rs 1 lakh crore are likely to be listed in the short or medium term.
Meanwhile, on the infrastructure side, assets with 3-5 years of operating history in various segments like roads, gas pipeline, digital fiber, power transmission and renewables are ideal candidates for monetization through the InvITs platform, Jain said, setting full monetization. at Rs 2.5 lakh crore.
“Over Rs 3.5 lakh crore of assets likely to be monetized via REIT and INvIT as platforms over the next year,” Icra said.
Monetization of infrastructure can include government using the platform for NHAI, PowerGrid, and GAIL, Jain noted.
Over the past two years, the InvIT space had witnessed the monetization of assets worth Rs 85,300 crore, while three REITs valued at Rs 77,100 crore were listed.