Public InvITs Gain Momentum as a Preferred Funding Mechanism for Road Infrastructure

Public Infrastructure Investment Trusts (InvITs) are increasingly emerging as a preferred financing mechanism for India’s road infrastructure sector, reflecting the growing maturity of operational highway assets and the evolution of the country’s infrastructure financing framework. The transition towards publicly listed InvITs is expected to broaden investor participation, improve market liquidity and provide road developers with access to diversified and cost-effective sources of long-term capital.

The trend has gained momentum with Cube Highways Trust initiating the process of converting its privately listed InvIT into a publicly listed InvIT through an initial public offering (IPO), involving an offer for sale of units aggregating approximately Rs.5,000 crore. Earlier this year, the National Highways Authority of India (NHAI) also completed the maiden public issue of Raajmarg Infra Investment Trust (RIIT), marking a significant milestone in the monetisation of operational highway assets through public capital markets.

Introduced by the Securities and Exchange Board of India (SEBI) under the SEBI (Infrastructure Investment Trusts) Regulations, 2014, InvITs have emerged as an important investment vehicle for infrastructure assets by enabling investors to participate in stable, income-generating projects. In the road sector, these returns are primarily supported by toll revenue generated from operational highway assets. Public listing is expected to expand the investor base beyond institutional investors to include mutual funds, insurance companies, pension funds and high-net-worth individuals, while improving liquidity, price discovery and market participation.

The evolving regulatory framework for InvITs, together with successive reforms undertaken by SEBI, has further strengthened investor confidence and enhanced the attractiveness of InvITs as a capital-raising instrument. In addition, the Ministry of Road Transport and Highways (MoRTH) is exploring the possibility of facilitating investments by state governments through state pension funds in road sector-focused InvITs, with the objective of increasing liquidity and encouraging greater long-term institutional investment.

From an infrastructure financing perspective, the increasing adoption of public InvITs reflects a significant shift towards market-based financing mechanisms for operational infrastructure assets. As India’s highway network continues to mature and generate predictable cash flows, publicly listed InvITs are expected to play an increasingly important role in asset monetisation, recycling of capital and financing future infrastructure development.