Infrastructure Investment Trusts need to be listed on stock exchanges besides being subject to stringent disclosure norms including detailed provisions for related party transactions and valuation of assets.
The regulations for InvITs, a new instrument aimed at attracting more investments into the infrastructure sector, was approved by capital market watchdog Sebi’s board on Sunday. Similar norms for Real Estate Investment Trusts (REITs) have also been approved by the board during its meeting.
Listing would be mandatory for “both publicly offered and privately placed InvITs” and they would be required to make continuous disclosures in terms of their listing agreement.
These trusts would invest in infrastructure projects, either directly or through a special purpose vehicle. In case of PPP projects, the investments can be made only through SPV.
The regulations have detailed provisions for “related party transactions, valuation of assets, disclosure requirements and rights of unit holders”.
“For any issue requiring unit holders approval, the voting by any person who is a related party in such transaction as well as its associates shall not be considered,” Sebi said.
According to Securities and Exchange Board of India (Sebi) regulations, the holding of an InvIT in the underlying assets should be at least Rs 500 crore while the offer size should not be less than Rs 250 crore at the time of initial offers of units.
The watchdog has also mooted stringent norms with regard to investments to be made by these trusts. InvITs putting in at least 80 per cent of the value of the assets in completed and revenue generating infrastructure assets should, among others, raise funds only through public issue of units.
In this regard, minimum subscription size and trading lot would be Rs 10 lakh and Rs 5 lakh, respectively.
For trusts, that propose to invest over ten per cent of its asset value in under construction projects, funds can be raised only through private placement to Qualified Institutional Buyers and body corporates.
A publicly offered InvIT can invest only up to ten per cent of its asset value in under construction infrastructure projects.