More than two years after markets watchdog Sebi had issued guidelines for infrastructure investment trusts (InvITs), the regulator has finally granted three companies -- IRB Infrastructure, GMR and MEP Infrastructure -- to launch the trusts. Accordingly, these companies will float IRB Invit Fund, GMR Infrastructure Trust and MEP Infrastructure Trust shorly as per Sebi, which is likely to relax norms for the real estate investment trusts (REITs) and InvITs later this month.
With a view to help infra developers mop up funds for long-term projects in a more transparent manner, Sebi had in August 2014 introduced InvITs -- an investment vehicle that would enable promoters to monetise completed assets. But the move failed to get enough attention of businesses owing to taxation issues. Following this, Sebi had recently said its board would look at relaxing the guidelines for both REITs as well as InvITs.
The Sebi board is expected to allow REITs and InvITs to have up to five sponsors, as against the present provision of only three. Under the proposal for InvITs, Sebi may allow such trusts to invest in two-level SPV (special purpose vehicle). The regulator plans to remove the restriction on the SPV to invest in other SPVs, thus allowing InvIT to invest in a holding company which subsequently holds stake in SPVs.
Currently, InvIT holds a controlling stake in SPVs that do not invest in other SPVs. Meanwhile, IRB Infrastructure in a regulatory filing on September 8 had announced that IRB InvIT Fund has filed the draft red herring prospectus with Sebi for Rs 4,300 crore initial public offering. The Mumbai-based toll road developer is the sponsor of IRB InvIT Fund (the trust) which is registered with Sebi.