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Sebi Issues Listing Norms for Infrastructure Investment Trusts

Author: Devesh Singh
by Devesh Singh
Posted: May 18, 2016

Securities and Exchange Board of India (Sebi) has issued listing guidelines for Infrastructure investment trusts or InvITs to launch the unit of infrastructure investment trusts. InvITs aims to make easier to raise money for infra projects from capital market, which would help the cash starved infrastructure developers.

Infrastructure investment trusts (InvITs) are like Real estate investment trusts (Reits) through which people can invest in infrastructure assets and companies can raise funds to complete their projects.

As per the norms, InvITs require institutional investors participation not more than 75 percent and not less than 25 percent from other investors. InvIT can allocate up to 60% of the portion available for allocation to Institutional Investors to anchor investors.

Anchor Investor shall make an application of a value of at least Rs. 10 crore in the public issue; provided that in case of strategic investor.

In public issue, allocation to Anchor Investors shall be on a discretionary basis and subject to the minimum of 2 investors for allocation up to Rs. 250 crore and minimum of 5 investors for allocation of more than Rs. 250 crore.

The bidding for Anchor Investors shall open one day before the issue opening date and allocation to Anchor Investors shall be completed on the same day, said the Sebi in the guidelines.

For opening of subscription, the InvIT will keep security deposit of 0.5% of the amount of units offered for subscription to the public or Rs 5 crore, whichever is lower with stock exchange.

A public issue shall be kept open for at least three working days but not more than 30 days. However, in case the price band in a public issue made through the book building process is revised, the bidding (issue) period disclosed in the final offer document shall be extended for a minimum period of one working day, provided that the total bidding period will not exceed thirty days, said the Sebi.

InvITs are permitted to invest in any infra projects through directly or via special purpose vehicle (SPV).

Various companies like IRB Infrastructure Developers, MEP Infrastructure Developers, GMR Infrastructure, IL&FS Transportation Networks India, Sterlite Technologies and others have sought Sebi approval to launch InvITs to raise money from the public for their various infrastructure projects.

InvITs are the need of infrastructure sector as industry is facing cash starved, once it will be launched, it is expected to generate huge investment for the sector and stalled projects might pick up the pace.

Source: Information has been obtained from Sebi circular

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Author: Devesh Singh

Devesh Singh

Member since: Apr 27, 2016
Published articles: 19

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