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CS Professional · Strategic Management and Corporate Finance · Infrastructure Investment Trusts

Himalaya Roads InvIT has surplus cash and its manager proposes to deploy it in a few ways. Which proposal is consistent with the investment restrictions applicable to an InvIT?

Lending to its holding company or SPV is the permitted proposal. An InvIT may not invest in vacant or agricultural land, and it may not lend to other parties. Funding its own project vehicles is part of how it holds infrastructure assets.

  1. ABuying vacant land near a highway for later sale
  2. BInvesting in agricultural land to hold it as a long-term asset
  3. CLending funds to a holding company or SPV through which it holds infrastructure projectsCorrect
  4. DGiving an unsecured loan to a sponsor's unrelated trading business

Explanation

An InvIT may not invest in vacant or agricultural land, and it may not lend except to its holdco or SPVs. Lending to its own project vehicles is therefore permitted. The other proposals fall outside the permitted investment and lending scope.

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