SEBI issues Guidelines for Infrastructure Investment Trusts

The Securities & Exchange Board of India has on 11th May 2016 issued guidelines for the public issue of units of Infrastructure Investment Trusts (“InfITs”). The guidelines lists out provisions for the Appointment & obligations of merchant bankers, allocation in public issue, public communications, publicity materials, advertisements and research reports, obligations post issue lead merchant bankers amongst others.

The key highlights are as detailed under:

  1. In an issue made through book building process or otherwise the allocation of public issue is required to be 75% units to institutional investors and the rest 25% to any other class of investors of which the investment manager on behalf of InfITs can allocate as much as 60% from the available 75% to anchor investors;
  2. Allocation to anchor investors to be done on a discretionary basis subject to the minimum of 2 investors for allocation up to250 crore & minimum of 5 investors for allocation of more than Rs.250 crore;
  3. Neither the merchant bankers nor any person of the merchant banker can apply under anchor investor category, except mutual funds, insurance companies and pension funds;
  4. The time period for opening of a public issue by an InfITs shall be for at least 3 working days and up to 30 days. However Anchor investors, such as mutual funds, insurance firms and pension funds can come in as strategic investors in the public issue of an InfITs if they apply for buying units worth at least10 crore. In case the price band in a public issue made through the book building process is revised, the bidding issue period will be extended for a minimum period of one working day;
  5. An amount calculated at the rate of 0.5 % of the amount of units of InfITs offered for the public subscription or Rs 5 crore, whichever is lower shall be deposited with the stock exchanges before the opening of subscription to the public by the Investment manager on behalf of InfITs;
  6. InvIT to invest in special purpose vehicles (“SPVs”) that act as holding companies for other SPVs. The holding company, in turn, needs to hold a controlling interest and at least 50 % in the underlying SPVs.

Subsequent to aforesaid guidelines SEBI has on 15th June 2016 SEBI issued a consultation paper on continuous financial disclosures to be made by InvITs.

Share Button