Sebi Has Finalised The Draft

Norms Of Invits
InvITs or Infrastructure Investment
Trusts are proposed in the Budget
2014-15 as an innovation to REITs to
improve funding in infrastructure
projects. These InvITs i!! a!so have
same ta" #enefits as REITs. InvITs
are proposed ith an aim to reduce
the pressure in the e"isting #an$ing
s%stem for infrastructure !oans.
&ccording to 'on(#!e )inance
*inister+ these to instruments
,REITs and InvITs- i!! attract a !ot of
!ong term finance from foreign and
domestic sources. .o /ecurit% E"change Board of India ,/EBI- has
pu#!ished the draft regu!ations of InvITs in accordance ith the
conductive ta" regime proposed in the #udget.
The fo!!oing are the regu!ations mentioned in the draft regu!ations pu#!ished #%
/EBI. InvITs can invest in an% of the infrastructure projects direct!% or through an
Special Purpose Vehicle(SPV). But in case of infrastructure projects through 000+
InvITs are supposed to invest on!% through /01s. This ensures the securit% and
transparenc%.
&n InvIT can raise funds either through pu#!ic issue of units or through private
p!acement from Qualified Institutional Buyers and #od% corporate #ut not #oth.
In the case of raising funds through public issue of units+ that InvIT shou!d invest
at !east 20 per cent of its funds on!% on comp!eted income generating projects and
20 per cent in under construction and other projects ith not more than 10 per
cent on under construction projects. This step is ta$en to ensure that the pu#!ic
funds i!! #e secured and income generating. The minimum su#scription si3e in this
t%pe of InvITs is s ! la"h.
In the case of raising funds through private placement from 4ua!ified institutiona!
#u%ers and corporate #od%+ that InvIT can invest more than 10 per cent of its
funds on under construction projects. The minimum su#scription si3e in this
t%pe of InvITs is s 1 crore.
Both the InvITs #efore ma$ing an offer to pu#!ic or private institutions ma% investors
such as #an$s+ internationa! mu!ti!atera! financia! institutions+ FPIs inc!uding
sovereign ea!th funds+ etc.+ hich together shou!d invest minimum 5 per cent of
si3e of InvIT or amount as specified #% /EBI.
The proposed ho!ding of an InvIT in the under!%ing assets sha!! #e not !ess than Rs
500 crore and the offer si3e of the InvIT sha!! not #e !ess than Rs 250 crore at the
time of initia! offer of units. &n InvIT cannot invest more than #$ per cent of
the value of InvIT%s assets on a particular infrastructure project. In case of
investing more than 25 per cent of the va!ue of InvIT(s assets+ re4uirement of credit
rating and unit ho!ders approva! has #een made mandator%.
/EBI has pu#!ished the draft regu!ations of REITs !ast %ear in hich it is given that an
REIT can on!% invest in comp!eted and income generating projects. But in the case
of InvITs+ the government has a!!oed investment in the under-construction projects
under certain conditions mentioned a#ove. In the case of REITs+ the minimum unit
si3e is Rs 1 !a$h hich is Rs 5 !a$h in the case of InvITs.
Source5 6ommon)!oor.com
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