Sebi allows InvITs to invest in projects directly or via SPVs
The Securities and Exchange Board of India (Sebi) said on Sunday, August 10, that Infrastructure Investment Trusts (InvITs) can make investments in a project either directly or through special-purpose vehicles (SPVs).
However, the Sebi guidelines for InvIT investments in projects clearly specify that, in case of public-private partnership (PPP) projects, investments can be made by InvITs only through SPVs.
According to Sebi, InvITs can invest in projects if the collective holding of the sponsors of the trusts is at least 25 percent of the total units for a period of at least three years, with the minimum proposed holding being Rs 500 crore. For investments through SPVs, the InvITs will have to hold a controlling interest or over 50 percent of equity share capital.
In addition, the guidelines laid down by Sebi to facilitate InvITs to invest in projects also draw borrowing directions for the trusts, with the stipulation that the aggregated consolidated borrowings of a trust as well as underlying SPVs will remain less than 49 percent of the value of the assets of the trust.
In cases in which borrowing is more than 25 percent of the value of InvIT assets, credit rating and unit-holders’ approval will be required.
Source – The Financial Express
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