SEBI amends Infrastructure InvestmentTrusts (InvITs) regulations 2024

The updated regulations now permit privately placed Infrastructure Investment Trusts (InvITs) to issue subordinate units exclusively to project sponsors upon acquiring an infrastructure project. This adjustment aims to reconcile the valuation disparities between the sponsor (acting as the seller) and the InvIT (acting as the buyer).

About InvITs: InvITs serve as investment vehicles akin to mutual funds, enabling investors to participate in infrastructure ventures such as toll roads, power lines, and pipelines. These trusts are established by infrastructure companies, approved by SEBI, and designated as borrowers under the SARFAESI Act 2002. The key entities involved in an InvIT include the trustee, sponsor, investment manager, and project manager. InvITs generate revenue through tolls, rents, interest, or dividends from their investments, subsequently distributing taxable earnings to investors.

Significance of InvITs:

  1. Accessibility: Investors can commit modest sums.
  2. Marketability: InvITs are listed on stock exchanges, facilitating easy exit.
  3. Transparency: Investors receive comprehensive updates on investment allocations.
  4. Security: SEBI regulations ensure a regulated environment for the trusts.

Challenges in InvIT Investing: Investing in InvITs poses operational, refinancing, and return-related risks.