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New InvIT norms to help infra firms in simplifying structure

Sebi on Friday reduced the required mandatory sponsor holding in InvITs to 15%

With the Securities and Exchange Board of India (Sebi) on Friday further relaxing guidelines for investment trusts (InvITs), companies can expect to unlock greater liquidity and a simplified structure.

on Friday reduced the required mandatory sponsor holding in InvITs to 15 per cent and also allowed InvITs to invest in a two-level special purpose vehicle (SPV) through holding companies. has also removed the limit on the number of sponsors of InvITs, allowing consortiums of multiple developers and investors which hold investments in projects to explore the option.

These two changes, companies and analysts said, that will help in simplifying the holding structure and allow companies to free up more cash locked in completed projects.

in a press statement on Friday said it will rationalise the requirements for private placement of InvITs. However, the regulator didn’t share further details. Analysts said the fine print would be crucial to further understand the full impact of the initiative.

So far, has registered three InvITs — IRB fund, and InvIT. “The change in the sponsor holding limit is a welcome step, but my personal view is if they reduce it too much, there is no skin left in the sponsor of the game. It is a good move for the sponsor, but not sure if the investors will be willing to come in the new product,” said Virendra Mhaiskar, chairman and managing director, IRB Developers. Mhaiskar added the two-level SPV structure is an operational requirement and a welcome move but will not impact IRB as most of its assets are held in a single-level SPV structure.

IRB Infra had in September filed its draft red herring prospectus with to list its fund. Tollways operator Developer is another company which plans to file a DRHP for its soon.

Jayant Mhaiskar, vice-president and managing director for Infrastructure, also welcomed the change. “We have an in principle approval and are in the process of filing our draft red herring prospective shortly. Allowing a larger number of sponsors helps companies for assets which are not 100% held subsidiaries. The move helps companies with multiple investors in the project.”

Analysts agree with company officials that changes are more structural in nature. “These are just structural changes and give the companies who have a complex structure some leeway. What we now need to see is at what valuation these InvITs will come at,” said Adhidev Chattopadhyay, analyst with Elara Capital.

New InvIT norms to help infra firms in simplifying structure
The move could help companies like Larsen and Toubro, which holds assets through a multiple-SPV structure. “There is a holding company for each asset. Mostly investors and developers are at the holding company level. In the earlier situation, what would have happened is they would have required to restructure the holding and then set up the which would have involved both time and transaction cost, now that will not be required,” said Madhav Poddar, tax partner-real estate, EY.

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Business Standard
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Business Standard

New InvIT norms to help infra firms in simplifying structure

Sebi on Friday reduced the required mandatory sponsor holding in InvITs to 15%

Amritha Pillay  |  Mumbai 

Relaxation in InvITs guidelines to help simplify structure for Infra companies

With the Securities and Exchange Board of India (Sebi) on Friday further relaxing guidelines for investment trusts (InvITs), companies can expect to unlock greater liquidity and a simplified structure.

on Friday reduced the required mandatory sponsor holding in InvITs to 15 per cent and also allowed InvITs to invest in a two-level special purpose vehicle (SPV) through holding companies. has also removed the limit on the number of sponsors of InvITs, allowing consortiums of multiple developers and investors which hold investments in projects to explore the option.



These two changes, companies and analysts said, that will help in simplifying the holding structure and allow companies to free up more cash locked in completed projects.

in a press statement on Friday said it will rationalise the requirements for private placement of InvITs. However, the regulator didn’t share further details. Analysts said the fine print would be crucial to further understand the full impact of the initiative.

So far, has registered three InvITs — IRB fund, and InvIT. “The change in the sponsor holding limit is a welcome step, but my personal view is if they reduce it too much, there is no skin left in the sponsor of the game. It is a good move for the sponsor, but not sure if the investors will be willing to come in the new product,” said Virendra Mhaiskar, chairman and managing director, IRB Developers. Mhaiskar added the two-level SPV structure is an operational requirement and a welcome move but will not impact IRB as most of its assets are held in a single-level SPV structure.

IRB Infra had in September filed its draft red herring prospectus with to list its fund. Tollways operator Developer is another company which plans to file a DRHP for its soon.

Jayant Mhaiskar, vice-president and managing director for Infrastructure, also welcomed the change. “We have an in principle approval and are in the process of filing our draft red herring prospective shortly. Allowing a larger number of sponsors helps companies for assets which are not 100% held subsidiaries. The move helps companies with multiple investors in the project.”

Analysts agree with company officials that changes are more structural in nature. “These are just structural changes and give the companies who have a complex structure some leeway. What we now need to see is at what valuation these InvITs will come at,” said Adhidev Chattopadhyay, analyst with Elara Capital.

New InvIT norms to help infra firms in simplifying structure
The move could help companies like Larsen and Toubro, which holds assets through a multiple-SPV structure. “There is a holding company for each asset. Mostly investors and developers are at the holding company level. In the earlier situation, what would have happened is they would have required to restructure the holding and then set up the which would have involved both time and transaction cost, now that will not be required,” said Madhav Poddar, tax partner-real estate, EY.

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New InvIT norms to help infra firms in simplifying structure

Sebi on Friday reduced the required mandatory sponsor holding in InvITs to 15%

Sebi on Friday reduced the required mandatory sponsor holding in InvITs to 15% With the Securities and Exchange Board of India (Sebi) on Friday further relaxing guidelines for investment trusts (InvITs), companies can expect to unlock greater liquidity and a simplified structure.

on Friday reduced the required mandatory sponsor holding in InvITs to 15 per cent and also allowed InvITs to invest in a two-level special purpose vehicle (SPV) through holding companies. has also removed the limit on the number of sponsors of InvITs, allowing consortiums of multiple developers and investors which hold investments in projects to explore the option.

These two changes, companies and analysts said, that will help in simplifying the holding structure and allow companies to free up more cash locked in completed projects.

in a press statement on Friday said it will rationalise the requirements for private placement of InvITs. However, the regulator didn’t share further details. Analysts said the fine print would be crucial to further understand the full impact of the initiative.

So far, has registered three InvITs — IRB fund, and InvIT. “The change in the sponsor holding limit is a welcome step, but my personal view is if they reduce it too much, there is no skin left in the sponsor of the game. It is a good move for the sponsor, but not sure if the investors will be willing to come in the new product,” said Virendra Mhaiskar, chairman and managing director, IRB Developers. Mhaiskar added the two-level SPV structure is an operational requirement and a welcome move but will not impact IRB as most of its assets are held in a single-level SPV structure.

IRB Infra had in September filed its draft red herring prospectus with to list its fund. Tollways operator Developer is another company which plans to file a DRHP for its soon.

Jayant Mhaiskar, vice-president and managing director for Infrastructure, also welcomed the change. “We have an in principle approval and are in the process of filing our draft red herring prospective shortly. Allowing a larger number of sponsors helps companies for assets which are not 100% held subsidiaries. The move helps companies with multiple investors in the project.”

Analysts agree with company officials that changes are more structural in nature. “These are just structural changes and give the companies who have a complex structure some leeway. What we now need to see is at what valuation these InvITs will come at,” said Adhidev Chattopadhyay, analyst with Elara Capital.

New InvIT norms to help infra firms in simplifying structure
The move could help companies like Larsen and Toubro, which holds assets through a multiple-SPV structure. “There is a holding company for each asset. Mostly investors and developers are at the holding company level. In the earlier situation, what would have happened is they would have required to restructure the holding and then set up the which would have involved both time and transaction cost, now that will not be required,” said Madhav Poddar, tax partner-real estate, EY.
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