Strategic Management and Corporate Finance · Infrastructure Investment Trusts

Parties to an InvIT and Their Responsibilities

Updated 11 October 2026 · Fact-checked

An InvIT works through four parties. The **sponsor** sets up the trust. The **trustee** holds the assets for unitholders and supervises. The **investment manager** manages assets and investments and handles disclosures. The **project manager** executes, operates or maintains the projects. To answer, state each role, then show how the parties check each other.

Understand Parties to an InvIT and Their Responsibilities

An Infrastructure Investment Trust (InvIT) is a trust registered with SEBI under the SEBI (Infrastructure Investment Trusts) Regulations, 2014. It pools money from investors and invests in infrastructure projects. A trust is not a company, so it cannot act by itself. It needs people and entities around it to do each job. These are the parties.

The sponsor is the entity that sets up the InvIT and is named as sponsor in the offer document. Think of the sponsor as the promoter. The sponsor must meet eligibility conditions set by the regulations and is expected to keep a stake in the InvIT. This is the 'skin in the game' that gives unitholders comfort.

The trustee is the legal owner of the InvIT assets. It holds them in trust for the benefit of unitholders. The trustee must be registered with SEBI as a debenture trustee and must not be an associate of the sponsor or the investment manager. This independence is why the trustee can act as a watchdog.

The investment manager runs the InvIT day to day. It makes investment decisions, manages the assets, appoints the valuer and auditor, ensures disclosures and distributions, and calls unitholder meetings. It acts under an investment management agreement with the trustee and is paid a fee, which must be disclosed.

The project manager is responsible for the project itself. For an under-construction project, it must see that the project is completed. For an operating project, it must see that the project is operated and maintained. It is named in the offer document and works with the investment manager. Remember the chain: sponsor sets up, trustee protects, investment manager manages the InvIT, project manager manages the project.

Key rules to remember

Sponsor: Sponsor = entity that sets up the InvIT and is designated as sponsor; Must meet eligibility and holding conditions in the regulations. Check the exact thresholds in the latest regulation text, as they have been amended.
Trustee: Trustee = SEBI-registered debenture trustee, not an associate of sponsor or investment manager, holds assets for unitholders; Signs the investment management agreement and oversees the manager's compliance. Independence from sponsor and manager is the key condition.
Investment manager: Investment manager = manages assets and investments, makes disclosures, appoints valuer and auditor, ensures distributions; Acts under the investment management agreement with the trustee and discloses its fees.
Project manager: Project manager = ensures completion of an under-construction project, or operation and maintenance of a completed one; Designated in the offer document. It is accountable for the project, not for running the InvIT.
Distribution rule: Distribution of net distributable cash flows: at least 90%; The investment manager must ensure distribution to unitholders at this minimum. Confirm the level of the rule for the structure you are asked about.

How to solve Parties to an InvIT and Their Responsibilities questions

Most questions give a short case about a failure or a decision and ask who is responsible, or ask you to describe the parties. Use this method.

1Identify the question type: describe the parties, compare two of them, or apply the roles to a case.
2List the four parties and give a one-line role for each before going into detail.
3Match each fact in the case to the party whose function it falls under: setting up and holding, legal ownership and oversight, management of the InvIT, or execution of the project.
4Quote the relevant duty in plain words from the SEBI InvIT Regulations. Give a regulation number only if you are sure of it.
5Check independence points. Ask whether the trustee is an associate of the sponsor or manager, and whether fees and conflicts are disclosed.
6Show the relationship: the trustee supervises the investment manager under the agreement, and the investment manager oversees the project manager.
7Conclude clearly: name the responsible party, the breach if any, and the corrective step such as disclosure, trustee action or replacement of the manager.

Quickest way: Four-word memory chain: Set, Hold, Manage, Build

When to use it: Use when time is short and the question asks you to list roles or identify who is responsible.

Write Set (sponsor), Hold (trustee), Manage (investment manager), Build or operate (project manager) in the margin.
Add one line of detail next to each word, such as 'SEBI-registered debenture trustee' next to Hold.
Mark the trustee as the independent check on the investment manager.
Map each fact in the case to one word and write your conclusion from that mapping.

Common mistakes in Parties to an InvIT and Their Responsibilities

Treating the sponsor and the investment manager as the same party.
Both are close to the InvIT and often belong to the same group, so students merge them.
Fix: Sponsor sets up the InvIT and holds a stake. Investment manager manages the assets and investments under an agreement with the trustee. The functions are different even when the group is the same.
Saying the investment manager owns the InvIT assets.
The manager makes investment decisions, so students assume it holds the assets.
Fix: The trustee holds the assets in trust for unitholders. The manager only manages them.
Forgetting that the trustee must be independent.
Students remember that the trustee supervises but skip the condition that it cannot be an associate of the sponsor or manager.
Fix: Always write that the trustee is a SEBI-registered debenture trustee and not an associate of the sponsor or investment manager.
Confusing the project manager with the investment manager.
Both words contain 'manager', and both appear in the offer document.
Fix: The project manager is responsible for the project, either its completion or its operation and maintenance. The investment manager is responsible for the InvIT as an investment vehicle.
Quoting exact net worth or holding percentages from memory.
The limits have been amended and old figures stay in notes.
Fix: Describe the condition in words and say 'as prescribed in the regulations' unless you are certain of the current figure.

Worked examples

Example 1

Aarav Infra InvIT has assets in operating toll roads. Unitholders complain that the investment manager delayed disclosures. Who is responsible, and what is the role of the trustee?

Show the solution

Disclosures and the conduct of the InvIT's investment activity fall under the investment manager's functions.
So the investment manager is primarily responsible for the delay.
The trustee holds the assets for unitholders and supervises the investment manager under the investment management agreement.
The trustee is independent, as it is a SEBI-registered debenture trustee and not an associate of the sponsor or manager. It is therefore expected to seek explanations and ensure compliance.
The project manager and sponsor have no direct disclosure duty in this fact pattern, because the issue is InvIT-level disclosure.

Answer: The investment manager is responsible for the delayed disclosures. The trustee must oversee the manager's compliance and take action in the interest of unitholders, which may include requiring correction and reporting the matter under the regulations.

Example 2

Distinguish between the sponsor and the investment manager of an InvIT.

Show the solution

Role: the sponsor sets up the InvIT and is designated as sponsor in the offer document. The investment manager manages the InvIT's assets and investments.
Relationship to the trust: the sponsor is the promoter-like party and is expected to hold a stake in the InvIT. The investment manager acts under an investment management agreement with the trustee.
Day-to-day work: the sponsor has no routine management role. The investment manager makes investment decisions, handles disclosures, appoints the valuer and auditor, and ensures distributions.
Remuneration: the investment manager earns a fee that must be disclosed. The sponsor's return comes mainly from its unit holding.
Accountability: both must satisfy eligibility conditions in the SEBI InvIT Regulations. The trustee supervises the investment manager.

Answer: The sponsor sets up the InvIT and keeps a stake in it. The investment manager runs the InvIT's investments and compliance under an agreement with the trustee, and earns a disclosed fee.

Exam tips

Start every answer with a one-line role for each of the four parties. It earns marks even if the case analysis is thin.
In case questions, name the responsible party first, then the duty breached, then the remedy.
Always mention the trustee's independence and its supervisory role over the investment manager.
Do not quote percentages or net worth limits unless you are sure they match the current regulations. Say 'as prescribed' instead.
If asked to compare, use two or three clear points such as role, relationship to the trust and accountability.

Practice questions from Infrastructure Investment Trusts

Parties to an InvIT and Their Responsibilities: frequently asked questions

What does the investment manager do in an InvIT?

The investment manager manages the InvIT's assets and investments. It makes investment decisions, ensures disclosures and distributions, and appoints the valuer and auditor. It acts under an investment management agreement with the trustee and discloses its fees.

What is the difference between the sponsor and the investment manager of an InvIT?

The sponsor sets up the InvIT and holds a stake in it. The investment manager runs the InvIT's investments and compliance under an agreement with the trustee. The same group may be behind both, but the functions are different.

What are the duties of the InvIT trustee?

The trustee holds the InvIT assets in trust for unitholders. It must be a SEBI-registered debenture trustee and not an associate of the sponsor or investment manager. It supervises the investment manager's compliance with the regulations and the trust deed.

Who is the project manager in an InvIT?

The project manager is the party named in the offer document as responsible for the project. For an under-construction project it ensures completion. For a completed project it is responsible for operation and maintenance.