Securities and Exchange Board of India (SEBI) has approved measures to enhance Ease of Doing Business for the activities of Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs). With a view to promote ease of doing business and to address practical and operational issues faced by InvITs and REITs, the Board considered and approved amendments to SEBI (Infrastructure Investment Trusts) Regulations, 2014 and to SEBI (Real Estate Investment Trusts) Regulations, 2014.
A Special Purpose Vehicle (‘SPV’) under an InvIT is required to invest at least 90% of its assets in infrastructure projects. Upon the conclusion of concession agreement, the infrastructure project in the SPV ceases to exist. However, the InvIT may have to continue to hold investment in such SPV since an immediate sale or winding up may not be practically possible.
To provide additional investment options for temporary deployment of funds by InvITs and REITs and to mitigate concentration risk, InvITs and REITs will be permitted to invest in units of liquid mutual fund schemes where the credit risk value is at least 10 and which fall under the Class A-I or Class B-I in the potential risk class matrix specified by the Board (i.e. liquid mutual fund schemes holding debt securities rated AA and above).
To align the investment norms for privately listed InvITs with publicly listed InvITs w.r.t. investment in greenfield infrastructure projects, privately listed InvITs will be permitted to invest up to 10% of the value of their assets in greenfield infrastructure projects (i.e. under-construction infrastructure projects as defined in the InvIT Regulations). Presently, privately listed InvITs cannot invest in PPP greenfield infrastructure projects.
InvITs with leverage exceeding 49% and up to 70% of the value of their assets will be allowed to avail fresh borrowings for capital expenditure, major maintenance expense for road project and refinance of existing debt which was originally utilized for permitted purposes subject to the condition that only the principal portion of the debt is refinanced.