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Powergrid InVIT IPO is a first-ever InvIT (Infrastructure Investment Trust) IPO by a state-owned company to be list on the bourses after IRB InvIT and India Grid Trust. Prior to subscribing to Power Grid InvIT, one must know that Infrastructure Investment Trust (InvIT) collects money from investors and invests it in infrastructure projects i.e. bridge, highway, road construction, etc. Technically speaking, it is a quasi-debt instrument that aims to generate regular income from the asset of Power Grid Corporation of India. Thus, risk and returns are shared equally between investor and investee.
Under Quasi Debt Instrument, companies have to distribute 90% of their income as a dividend subject to TDS deduction. Thus, returns are more or less guaranteed, henceforth, InvIT IPO is not for listing gain, they are apparently to generate regular long-term income or regular cash flow in terms of dividend. For instance, in the case of India Grid Trust InvIT IPO, investors are getting 10%+ Annual returns as dividends. Thus, investors who are seeking to generate regular dividend income can subscribe to the PowerGrid InvIT IPO.
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