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02 June 2016

Guidelines for public issue of units of Infrastructure Investment Trusts

The SEBI (Infrastructure Investment Trusts) Regulations, 2014 introduced the concept of Infrastructure Investment Trusts (‘InvITs’). The purpose of the same was to establish a framework for InvITs and regulate their registration process. Now through Circular No. CIR/IMD/DF/55/2016, dated 11-5-2016, SEBI has laid down the guidelines for the same. As per the guidelines, InvITs are permitted to opt for public issue by adopting the following procedures:

  1. Similar to a practice followed by a company, InvITs are required to appoint merchant bankers and file the offer document.
  2. During allocation of public issue for InvITs, 75% and 25% of units of InvITs are to be allocated to institutional investors and other investors, respectively. Further, an investment manager, on behalf of an InvIT, may allocate up to 60% of the portion available for allocation to institutional Investors to anchor investors.
  3. Before the opening of subscription, an amount worth 0.5% of the amount of units offered for subscription to the public or Rs 5 crore, whichever is lower, shall be deposited and maintained with the stock exchange, by the InvIT.
  4. Further, a public issue shall be kept open for at least 3 working days, but not more than 30 days. However, in case of revision of the price band in a public issue made through the book building process, the bidding issue period will be extended for a minimum period of 1 working day.
  5. For opening and closing an issue, advertisements may be issued by InvIT, however, such advertisements shall not contain any matter extraneous to the contents of the offer document.
  6. Post-issue, the lead merchant banker shall regularly monitor redressal of investor grievances relating to allotment, refund, etc.
  7. Public issue shall not be made by an InvIT, if the InvIT or parties to the InvIT, or the promoters or directors of parties to the InvIT:
  • is/are debarred from accessing securities markets by SEBI, or
  • is/are promoter, director, or person in control of any other company or a sponsor, investment manager, or trustee of any other InvIT, which is debarred from accessing securities marlets by SEBI, or
  • is/are in the list of willful defaulters published by RBI.

 

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