< Previous | Contents | Next >
SEBI also announced the launch of InvITs which are somewhat similar to REITs. However, an initial offer will not be mandatory for InvITs though listing will be mandatory for both publicly and privately placed InvITs. Major provisions are as given below:
(i) It can invest in infrastructure projects, either directly or through an SPV (Specila Purpose vehicle). In case of public-private-partnership (PPP) projects, such investments will be only through an SPV.
(ii) While listing, the collective holding of sponsors of an InvIT has to be at least 25 per cent for at least three years.
(iii) Required to have a holding worth at least Rs.500 crore in the underlying assets, and the initial offer size of the InvIT has to be at least Rs.250 crore.
(iv) Any InvIT, which looks to invest at least 80 per cent of its assets in completed and revenue generating infrastructure assets, has to raise funds only through a public issue of units, with a minimum 25 per cent public float and at least 20 investors.
(v) The minimum subscription size and trading lot of such a listed InvIT has to be Rs.10 lakh and Rs.5 lakh, respectively. A publicly offered InvIT may invest the remaining 20 per cent in under-construction infrastructure projects and other permissible investments.
An InvIT that proposes to invest more than 10 per cent of its assets in under-construction infrastructure projects can raise funds only through private placement from qualified institutional buyers with a minimum investment and trading lot of Rs.1 crore and from at least five investors, where single holding cannot be more than 25 per cent.
Recent developments: To promote the real estate and infrastructure trusts, a friendlier tax regime was put in place by the GoI through two successive Union Budgets, 2014–15 and 2015–16. However, the idea of the trusts could not get much momentum. Basically, due to subdued market conditions in the sectors attracting investors—new (greenfield) project or a trust—has remained difficult by now. Majority of the existing projects in the sectors are running into losses with weak balance sheets of their developers, unable to
even service their bank loans.
To push the cause of the trusts, by mid-March, 2016, the security market regulator, SEBI, permitted the foreign portfolio investment (FPI) in the trusts. How much interest the FPIs will show in the trusts it will be known only in future, meanwhile, experts believe that real momentum in the sectors can be only expected once the macro-economic conditions improve in the economy.