The Securities and Exchange Board of India (SEBI) on Monday cleared amendments to the Infrastructure Investment Trust and Real Estate Investment Trust regulations, allowing InvITs to continue holding investments in special purpose vehicles (SPVs) even after the underlying infrastructure project has concluded.
This move is aimed at resolving practical difficulties arising from pending claims, litigation, tax assessments or defect liability periods that delay exit from such entities.
Exit timeline
Under the amended framework, InvITs must exit these SPVs or acquire new infrastructure assets within one year from the completion of concession agreements or resolution of pending issues. Time taken for regulatory approvals will be excluded from this timeline, while enhanced disclosures will be mandated.
In another key change, SEBI has broadened investment avenues for InvITs and REITs by permitting deployment of surplus funds into a wider set of liquid mutual fund schemes. These now include schemes with slightly lower credit thresholds — those rated AA and above — compared with the earlier restriction to top-rated instruments, a move expected to help mitigate concentration risk.
The Board has also aligned norms for privately listed InvITs with publicly listed counterparts by allowing them to invest up to 10 per cent of their assets in under-construction, or greenfield, infrastructure projects. Previously, such investments were not permitted for privately listed InvITs, limiting their participation in early-stage projects.
Additionally, SEBI has relaxed borrowing norms for InvITs with higher leverage. Trusts with leverage between 49 and 70 per cent of asset value will now be allowed to raise fresh debt for capital expenditure, major maintenance of road projects and refinancing of existing borrowings — provided only the principal component is refinanced.