To make it easier to raise funds for infrastructure projects from capital markets, Sebi today proposed to relax its norms for Infrastructure Investment Trusts (InvITs) by lowering the sponsors' mandatory holding to 10 per cent and by allowing greater operational flexibilities.
Under the proposed norms for InvITs, a new investment product for arranging long-term financing for infrastructure projects, Sebi has suggested allowing such trusts to invest in two-level SPV (special purpose vehicle) structure.
Currently, InvITs can either hold infrastructure assets either directly or through an SPV, in which such a trust holds control. It has been now proposed to allow InVITs to invest in a holding company which would further invest in other SPVs.
The move is expected to address concerns related to tax inefficiencies, lender considerations, difficulties in exit for financial investors, which may arise if a holding company investment is not allowed.
Current norms also provide for sponsors of an InvIT to hold minimum 25 per cent stake for at least three years, which Sebi has proposed to lower to 10 per cent.
A final decision would be taken after looking into the public comments on the proposed changes.
Issuing a discussion paper for amendments to InvIT Regulations, 2014, the capital markets watchdog has invited comments from all stakeholders till September 6.
The changes have been proposed to make it more attractive for the sponsors to float such vehicles.
Sebi, in September last year, had notified its norms for InvITs thereby providing a regulatory framework for registration and regulation of such trusts in the country.
The infrastructure assets in India are usually held through different Special Purpose Vehicles (SPVs), where the promoters of such SPVs create separate holding companies (Holdcos) which in turn hold stake in the underlying SPVs.
Thus, the sponsors may have separate Holding Companies which hold multiple SPVs that have projects of a particular category.
