Institutional exposure to Infrastructure Investment Trusts (InvITs) is steadily rising, signalling what industry leaders describe as a “structural shift” in capital allocation towards infrastructure-backed yield platforms.
According to ICRA, the market valuation of Indian InvITs has expanded multifold—from approximately ₹40,000 crore in March 2020 to over ₹7 lakh crore as of February.
With institutions such as India Infrastructure Finance Company Ltd indicating plans to double their InvIT investments to ₹6,000 crore by FY27, market participants say the trend reflects a broader transition rather than isolated institutional moves.
N S Venkatesh, chief executive officer of the Bharat InvITs Association, said the growing commitment to InvITs is underpinned by the asset class’s track record of stable, annuity-like cash flows and strengthened governance standards. “The shift is driven by a national emphasis on infrastructure creation and a growing institutional need for reliable, long-term yields,” he noted.
Regulatory Moats
However, he added that while the trajectory toward mainstream acceptance is clear, it is not yet universal. “The momentum is largely propelled by state-backed initiatives and the National Monetization Pipeline, while some private players remain more selective,” Venkatesh said.
Over the past decade, regulatory refinements by the Securities and Exchange Board of India have enhanced transparency and operational efficiency in the InvIT framework, boosting investor confidence. Institutional investors—including pension funds, insurance companies, banks, mutual funds and large corporates—currently account for around 8% of total InvIT unit holdings, according to ICRA. While this remains modest compared to global markets, industry observers expect the share to rise steadily in the coming years.
Several structural factors are driving participation. InvITs are mandated to distribute at least 90% of their net distributable cash flows, making them attractive to institutions with long-term liabilities. Leverage is capped at 49%, extendable to 70% subject to conditions such as a AAA rating and a track record of six distributions—safeguards that support healthy coverage metrics.
Compared to traditional infrastructure lending, InvITs offer a more efficient capital allocation mechanism, with improved risk management and transparent governance. The model also enables developers to monetise operational assets and recycle capital into new projects, aligning with the broader infrastructure financing agenda.
Sectoral Trends
From a credit perspective, roads and highways have gained strong traction due to established toll and annuity models. Their share in total InvIT asset value has risen sharply—from 16% in March 2021 to 39% in March 2025—and is expected to exceed 40% by March 2026.
Suprio Banerjee, vice president and co-group head at ICRA, said, “The increasing share of roads is likely to continue into FY2027 with the expected listing of Citius TransNet Investment Trust. Nevertheless, the telecom (including fibre) sector continues to lead the InvIT landscape in terms of asset value, with two major telecom InvITs accounting for nearly half of the total.”
Even smaller banks, which currently have limited or no exposure to InvITs, remain open to participation if suitable opportunities arise. “Most InvIT exposures are through consortium or multiple lending. Our bank may not be large enough to underwrite significant exposures, but we are open to participating when the right opportunity comes,” a senior official at a mid-sized private sector bank said.
Vijay Mulbagal, group executive and head of wholesale bank coverage Axis Bank, said the bank remains constructive on InvITs as an asset class, citing their scalability as a means to participate in infrastructure growth.
“The InvIT structure offers strong governance and diversification, supported by regulatory limits on leverage—key factors driving its continued appeal among lenders and its rapid growth,” he said.