SEBI To Amend Eligibility Norms For InvIT Investment Managers, Fast Track Issuance
The headquarters of the Securities and Exchange Board of India (SEBI) in Bandra-Kurla Complex, Mumbai, India. (Photographer: Sajeet Manghat/ BloombergQuint)

SEBI To Amend Eligibility Norms For InvIT Investment Managers, Fast Track Issuance

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The Securities and Exchange Board of India has decided to amend the investment manager eligibility norms for Infrastructure Investment Trusts and permit fast-track issuance of units to existing investors in REITs and InvITs.

The changes in eligibility norms, approved by the SEBI board at a meeting in Mumbai on Monday, comes amid National Highways Authority of India's plans to set up an InvIT to monetise its completed public-funded projects.

At present, InvIT regulations require the investment manager to have at least five years of experience in fund management or advisory services or development in the infrastructure sector. Besides, the investment manager needs to have at least two employees, each with five years of experience in the infrastructure sector.

As an alternative, SEBI will now allow a combined relevant experience of at leat 30 years of directors, partners and employees of the investment manager, even if it is a newly created entity.

The capital markets regulator has been receiving representations from the industry and market participants for tweaking the eligibility criteria on investment managers.

In one such representation, NHAI told SEBI that it is considering to set up an InvIT for monetising its completed public-funded projects and proposed to set up a new company to act as the investment manager for the proposed InvIT.

NHAI had proposed that this new company would be headed by a board comprising 4-5 members, each having an experience of at least 15-20 years in fund management or development of infrastructure or highway activities. The new company will also have five managerial-level employees, each with at least five years of experience in development of infrastructure or highways.

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Putting On The Fast Track

The rework in the elegibility criteria for investment mangers “is expected to enable people with expertise in the relevant areas to be able to set up a new entity to act as IM to an InvIT and leverage such expertise in management of the InvIT," an official said.

To fast-track rights issue, the current norms specify that any follow-on offer or rights issue can be made by an REIT or InvIT within a period of one year from the date of issuance of observations by SEBI.

However, listed companies are allowed to raise capital through rights issue without the requirement of obtaining the market regulator’s observations if they are in compliance with the continuous listing and disclosure requirements and certain other conditions.

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On receipt of representations from market participants for allowing similar facility to REITs and InvITs, SEBI has now decided to allow them to launch similar fast-track rights issue of units, provided they satisfy the registration conditions and no regulatory action has been imposed on them in the three preceding years.

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