RInfra, Sterlite Power Transmission plan to launch InvITs

Reliance Infrastructure and Sterlite Power Transmission have proposed to set up infrastructure investment trusts (InvITs) for which they have filed draft papers with markets regulator Sebi.
Besides, Embassy Office Parks has approached Securities and Exchange Board of India (Sebi) to launch real estate investment trust (REIT).
After getting approval from Sebi, Reliance Infra and Sterlite Power Transmission will float Reliance Infrastructure InvIT Fund and Sterlite Power Transmission Trust, respectively.
Sebi has already granted approvals to three companies, IRB Infrastructure, GMR and MEP Infrastructure, to launch trusts.
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 and REITs -- investment vehicles that would enable promoters to monetise completed assets.

But the move failed to get enough attention of businesses owing to taxation issues.

Last month, Sebi in its board meeting decided to further relax the norms for both REITs as well as InvITs.
It allowed REITs and InvITs to invest in two-level (special purpose vehicle) structure through a holding company. This is subject to sufficient shareholding in the holding company and the underlying SPV.
The Sebi board allowed REITs and InvITs to have up to five sponsors, as against the provision of only three. Besides, such trusts are allowed to have rights to appoint majority directors in the SPV.

Further, the holding company would be allowed to distribute 100 per cent cash flow realised from underlying SPVs and at least 90 per cent of the remaining cash flow.