Thursday, August 14, 2014

SEBI finalises Draft Norms for Infra Investment Trusts

Taking forward a proposal made in the Union budget, the Securities and Exchange Board of India (SEBI), came out with draft guidelines for Infrastructure Investment Trusts (InvITs), which will enable creation of a new investment product for arranging long-term financing for infrastructure projects. These InvITs can be listed on the stock exchanges, will get tax benefits and will invest the funds collected from investors in infrastructure projects, including PPP (Public Private Partnership). The SEBI guidelines state that the proposed holding of an InvIT in the underlying assets shall be not less than Rs 500 crore, and the offer size of the InvIT shall not be less then Rs 250 crore at the time of initial offer of units. The aggregate consolidated borrowing of the InvIT and the underlying SPVs shall never exceed 49 per cent of the value of InvIT assets. However, this may exclude any debt infused by the InvIT in the underlying SPV and further, for any borrowing exceeding 25 per cent of the value of InvIT assets, requirement of credit rating and unit holders approval has been made mandatory. The draft guidelines in respect of Real Estate Investment Trust (REITs) have been approved by SEBI.

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