InvITs to help develop the real estate sector
Infrastructure Investment Trusts (InvITs) can invest in a project either directly or through special-purpose vehicles, the Securities and Exchange Board of India (Sebi) said on Sunday. However, in most of the cases of public-private partnership projects, such investments are only allowed through SPVs.
The different sponsors of an InvIT need to collectively hold at least 25 percent of the total units for a minimum duration of three years with the proposed holding of not less than R500 crore. For investments through SPVs, an InvIT is guided to hold controlling interest or more than 50 percent of equity share capital.
The Sebi guidelines also draw borrowing directions for InvITs with the condition that the aggregated consolidated borrowings of a trust and underlying SPVs shall never exceed 49 percent of the value of the assets of the trust. For any borrowing exceeding 25 percent of the value of InvIT assets, credit rating and unit holders’ approval is required.
This new norms and guidelines will look to the fact that no loss is garnered through the whole process. The approvals for the Real Estate Infrastructure Investment Trusts have been approved by Sebi soon after budget announcements.
Source: Financial Express
Infrastructure Investment Trusts, sebi guidelines, Securities and Exchange Board of India, special purpose vehicles
