New Delhi, Capital markets regulator Sebi on Tuesday notified a framework for issuance of subordinate units by privately held infrastructure investor trusts (InvITs).
The purpose of issuing subordinate units is primarily to bridge the valuation gaps that may arise as a result of differences in the valuation of the asset assessed by the sponsor (in its capacity as asset seller) and the InvIT (in its capacity as asset seller). Buyer).
Also, a framework has been prepared to incorporate risk mitigation measures in respect of such units.
SEBI, in its notification on Monday, said subordinate entities will be issued only privately placed InvITs on acquisition of infrastructure project.It further states that the InvIT will not raise funds through public issues if subordinate units have been issued and outstanding. To give this effect, the Securities and Exchange Board of India (SEBI) has amended the InvITs Rules.
InvITs are a new concept in the Indian market but have been a popular option globally for their attractive returns and capital appreciation. InVIT comprises a portfolio of infrastructure assets such as highways.
According to the notification, SEBI said, “Subordinated units will be issued only to the sponsor, its associates and the sponsor group and will be considered as part of the consideration for the acquisition of infrastructure project from such sponsor, its associates and the sponsor group.Sponsor Group”.
Sponsor means any company or LLP that sets up the InvIT, except that the subordinate units will not have any voting rights or distribution rights, other than the ordinary units, to be issued in dematerialized form with an International Securities Identification Number. Needed. The subordinated units will be listed on a recognized stock exchange after reclassification into common units.
“Subordinated units can be issued through the initial offer or any offshoot after the initial offer, either with the issue of common units or without the issue of common units,” the regulator said.
The total number of outstanding subordinate units issued by an InvIT at any one time should not exceed 10 per cent of the total number of outstanding ordinary units issued by such InvIT.However, an InvIT whose subordinated units exceed the limit, such InvI may issue additional subordinated units subject to compliance with this limit. Unitholders holding at least 10 per cent of the total outstanding units of the InvIT, individually or collectively, will be entitled to this. To nominate a director on the board of directors of the investment manager.
Such nominee director is required to abstain from voting on any transaction where such nominee director or an affiliate of such nominee director or Unitold nominating such nominee director is a party.
According to SEBI, the minimum time period between the issuance of subordinate units and the eligibility date for reclassification of subordinate units into normal units will be three years.The investment manager is required to disclose progress related to the achievement of performance benchmarks in the annual report of the InvIT.
The purpose of issuing subordinate units is primarily to bridge the valuation gaps that may arise as a result of differences in the valuation of the asset assessed by the sponsor (in its capacity as asset seller) and the InvIT (in its capacity as asset seller). Buyer).
Also, a framework has been prepared to incorporate risk mitigation measures in respect of such units.
SEBI, in its notification on Monday, said subordinate entities will be issued only privately placed InvITs on acquisition of infrastructure project.It further states that the InvIT will not raise funds through public issues if subordinate units have been issued and outstanding. To give this effect, the Securities and Exchange Board of India (SEBI) has amended the InvITs Rules.
InvITs are a new concept in the Indian market but have been a popular option globally for their attractive returns and capital appreciation. InVIT comprises a portfolio of infrastructure assets such as highways.
According to the notification, SEBI said, “Subordinated units will be issued only to the sponsor, its associates and the sponsor group and will be considered as part of the consideration for the acquisition of infrastructure project from such sponsor, its associates and the sponsor group.Sponsor Group”.
Sponsor means any company or LLP that sets up the InvIT, except that the subordinate units will not have any voting rights or distribution rights, other than the ordinary units, to be issued in dematerialized form with an International Securities Identification Number. Needed. The subordinated units will be listed on a recognized stock exchange after reclassification into common units.
“Subordinated units can be issued through the initial offer or any offshoot after the initial offer, either with the issue of common units or without the issue of common units,” the regulator said.
The total number of outstanding subordinate units issued by an InvIT at any one time should not exceed 10 per cent of the total number of outstanding ordinary units issued by such InvIT.However, an InvIT whose subordinated units exceed the limit, such InvI may issue additional subordinated units subject to compliance with this limit. Unitholders holding at least 10 per cent of the total outstanding units of the InvIT, individually or collectively, will be entitled to this. To nominate a director on the board of directors of the investment manager.
Such nominee director is required to abstain from voting on any transaction where such nominee director or an affiliate of such nominee director or Unitold nominating such nominee director is a party.
According to SEBI, the minimum time period between the issuance of subordinate units and the eligibility date for reclassification of subordinate units into normal units will be three years.The investment manager is required to disclose progress related to the achievement of performance benchmarks in the annual report of the InvIT.
