Sebi receives four applications for infrastructure investment trusts; two cleared

MUMBAI: The country may soon get its very first Infrastructure Investment Trusts (InvITs), with the markets regulator Sebi approving two of the four applications received by it for setting up such entities.

"We have received four applications for registration in InvITs so far. We have already cleared two of them," Sebi chairman U K Sinha said here today.

He said the two other proposals had certain shortcomings and the regulator has accordingly advised the applicants on how to deal with it.

"There were certain information missing and there were certain agreements they should have done before coming to us. These are minors things and we more than willing to encourage entities to come up," Sinha told reporters on the sidelines of a conference on REITs and InvITs by Asia Pacific Real Estate Association.

However, no application has been received for Real Estate Investment Trust (REIT), although the regulator has been getting a lot of enquiries from potential companies and entrepreneurs and applications should be soon filed for setting up these entities as well, Sinha said.

These new instruments will help garner funds from investors for further investment into infrastructure and real estate projects.

Sinha further said Sebi has set up three committees to look into listing agreement, continuous disclosure requirements and valuations related to InvITs and clarifications and norms with regard to these issues would be out by June-end.

"The industry and professional bodies are actively participating in those discussions. All these regulations and clarifications would be out by June-end," Sinha said.

Securities and Exchange Board of India (Sebi) had on May 11 come out with guidelines for public issuance of InvITs.

The new norms for the public issuance of InvITs pertain to appointment of merchant bankers, disclosures in the offer documents, filing of draft papers and keeping them in the public domain for at least 21 days.

Besides, the Sebi chief also said they plan to revamp InvITs regulations after receiving recommendations from the industry and may bring in a consultation paper proposing amendments to InvITs regulations in a few days.

"We have received number of suggestions with regard to InvITs. Some of these suggestions are with regard to two level of special purpose vehicles (SVPs) and whether the mandatory sponsor holding should be 25 per cent or less or to just increase the number of sponsors," Sinha said.

"We will be coming out with a consultation paper in few days. And we would be happy to make whatever changes necessary following consultations," he said.

On REITs, the Sebi chief a lot of enquiries have come and he is hopeful for the applications to be filed soon.

"They (firms and entrepreneurs) have lot of clarifications and want to understand the mechanism. So my impression is that very soon will have applications for REIT as well," Sinha said.

At the same event, NSE managing director and CEO Chitra Ramkrishna said REITs and InvITs had huge potential to succeed in the markets and transparency connected to these vehicles makes it possible for a wide class of investors to participate.