The Securities and Exchange Board of India (SEBI) on Wednesday allowed unlisted infrastructure investment trusts (InvITs) to come up with rights issues in a bid to make it easier for them to raise funds.
In a circular, SEBI said unlisted InvITs looking to float a rights issue will have to open the offering within three months from the “record date” that will determine the unit holders who will be eligible to participate in the sale.
The rights issue will have to be kept open for subscription for at least three working days and up to 15 days, the capital markets regulator said. SEBI has set the minimum allotment per investor at Rs 1 crore.
At last count, at least 11 InvITs were registered with SEBI, of which three are listed on the stock exchanges. These 11 InvITs are operational across several sectors including roads, power transmission, gas transmission and telecom towers and infrastructure. The three listed InvITs are India Grid Trust, IRB InvIT Trust and IndInfravit Trust.
Among the most prominent unlisted InvITs is Digital Fibre Infrastructure Trust, which is sponsored by a unit of billionaire Mukesh Ambani-led Reliance Industries Ltd. The InvIT holds the assets of Jio Digital Fibre Pvt. Ltd, which operates and manages optic fibre cables and provides infrastructure services to telecom service providers.
The InvIT was aiming to raise as much as Rs 14,706 crore ($2 billion) by selling units via a private placement, VCCircle reported in late September. Last week, Reliance said that Abu Dhabi Investment Authority and Saudi Arabia’s Public Investment Fund had invested Rs 3,779 crore each to buy units of the fibre trust.
SEBI has been progressively easing regulations for InvITs starting June 2016, when it first allowed such trusts to invest in two-level special purpose vehicles (SPVs). This removed the restriction on SPVs to invest in other SPVs, thus allowing InvITs to invest in a holding company which subsequently holds stake in SPVs.
In January 2017, SEBI allowed InvITs and real estate investment trusts to raise capital via the debt markets. The following year, in January 2018, it allowed strategic players, such as international multilateral financial institutions and non-banking financial companies, to invest up to 25% in InvITs and REITs.
More recently, SEBI allowed InvITs and REITs to raise equity capital via the institutional placement route in September this year.