Indian construction and infrastructure pioneer, IRB Infrastructure Developers has been granted the permission for infrastructure investment trusts (InvITs) by Securities and Exchange Board of India (SEBI). It is after a period of two years since the issuing of infrastructure investment trusts (InvITs) guidelines by SEBI that it finally granted permission to launch the trusts.
Apart from IRB Group, three other companies have attained SEBI’s approval, which include- GMR and MEP Infrastructure. The companies will shortly come up with the IRB Invit Fund, GMR Infrastructure Trust and MEP Infrastructure Trust.
A relaxation is also expected in the SEBI’s guidelines for real estate investment trusts (REITs) and InvITs in the upcoming month. The InvITs were introduced by SEBI in the year 2014, in an attempt to aid the infra developers with funds for long-term projects. The promoters would able to monetize completed assets using the InvITs.
SEBI is likely to permit REITs and InvITs to have up to five sponsors. At present it has a provision of three only. Under the proposal for InvITs, SEBI may allow such trusts to invest in two-level SPV (special purpose vehicle).
The restrain on the SPV to invest in other SPVs is expected to be removed by SEBI. As a result of this, the InvIT will be allowed to invest in a holding company, which subsequently holds stake in SPVs. At present, InvIT holds a controlling stake in SPVs that do not invest in other SPVs.
IRB Infrastructure is the sponsor of IRB InvIT Fund (the trust) which is registered with SEBI. The company asserted that IRB InvIT Fund has filed the draft red herring prospectus with SEBI for Rs 4,300 crore initial public offering.