Sebi plans to relax InvITs rules to draw business houses

New Delhi: With Infrastructure Investment Trusts (InvITs) failing to catch due attention, markets watchdog Sebi plans to ease rules, including by reducing mandatory sponsor holding to hold 10 percent.

The Securities and Exchange Board of India (Sebi), in 2014, had introduced InvITs -- an investment vehicle which would enable promoters to monetise completed assets -- to make it easier to raise funds for infrastructure projects.

However, InvITs have failed to garner due attention from business houses in the country.

Now, the regulator plans to revamp InvITs regulations after receiving recommendations from the industry and may bring in a consultation paper proposing amendments to InvITs regulations, sources said.

The issue in this regard is likely to be discussed at Sebi's board meeting this week.

Under the proposal, Sebi may allow InvITs to invest in two-level SPV (special purpose vehicle).

The regulator plans to remove the restriction on the SPV to invest in other SPVs, thus allowing InvIT to invest in a holding company which subsequently holds stake in SPVs.

Currently, InvIT holds a controlling stake in SPVs that do not invest in other SPVs.

Besides, Sebi is considering reducing the mandatory sponsor holding in InvIT to 10 percent of the total units of such units on a post-issue basis for a period of three years, from the current requirement of 25 percent.

The current requirement may limit monetisation for sponsors and reduce release of capital for them. Further, in certain circumstances, it may lead to sponsors putting money out of their own pocket in the InvIT to maintain the required 25 percent stake.

The regulator also plans to increase the number of sponsors to five, from the current requirement of three.