Can you tell me about the proposed Bharti Airtel INVIT issue?

Firstly, there is nothing concrete as of now but newspapers have reported that Bharti has approached investment bankers for the purpose. Apparently, Bharti may look at raising up to $2 billion through the INVIT route by hiving off its optical fibre business. You may recollect that these INVITs were permitted in 2014 as a special purpose vehicle (SPV) to help monetize infrastructure assets of a business.

Bharti plans to use the INVIT route to monetize its 2.7 lakh KM of optic fibre assets spread across India; either fully or partially. These assets will be transferred to the INVIT structured as a SPV. This SPV will have pass through status and so Bharti will be in a position to transfer its said assets into the INVIT and issue INVIT units against these assets. Structurally, INVITs are slightly different from REITs. Firstly, REITS monetize real estate projects and issue units while INVITs monetize infrastructure projects. Secondly, REITs are structured for equity participation instruments but INVITs are normally structured to be fixed return instruments. This makes INVITs more attractive to institutional investors. Jio has already done this.