Market regulator SEBI today put in place a detailed framework for listed infrastructure investment trusts to make preferential issue of units to institutional investors.
The Securities and Exchange Board of India said preferential issues need to be completed within 12 months from the date of passing of the resolution by an InvIT’s unit holders. The units in a preferential issue would be offered and allotted to a minimum of two investors and a maximum of 1,000 investors in a financial year. The gap between preferential issue of units by InvITs should be six months, and allotment needs to be completed within 12 days.
“The units to be issued in preferential issue shall be of same class or kind as the units issued in the initial offer by the InvIT,” SEBI said in a circular.
“Further, such units have been listed on a recognised stock exchange, having nationwide trading terminal for a period of at least six months prior to the date of issuance of notice to its unit holders for convening the meeting to approve the preferential issue,” it added.
The InvIT will have to appoint one or more registered intermediaries to carry out the obligations relating to the issue, according to the circular.
The investment trust will have to file placement documents with stock exchanges disclosing financial details of InvITs, objects of the issue, related party transactions, valuation report of the asset to be financed through proceeds of the issue, unit holding pattern, review of credit rating and grievance redressal mechanism.
Further, they need to inform about high, low and average market prices of units of the InvIT during the preceding three years or since the date of listing until the date of the placement document, as applicable as well as monthly high and low prices for the six months in the placement documents.
The preferential issue shall be made at a price not less than the average of the weekly high and low of the closing prices of the units quoted on the stock exchange during the two weeks preceding the relevant date.SEBI Circular
It said the allotment would not be made, either directly or indirectly, to any party to the InvIT or their related parties except to the sponsor.
Besides, the units allotted under preferential issue would not be sold by the allottee for a period of one year, except on a recognised stock exchange.
The regulator had notified InvITs Regulations in 2014, allowing setting up and listing of such trusts which are very popular in some advanced markets. However, only two InvITs – IRB InvIT Fund and Indiagrid Trust – have got listed on stock exchanges so far.