SEBI eases norms for InvITs and REITs

The Securities and Exchange Board of India (SEBI) has notified new rules reducing the minimum allotment lot in the primary market for privately placed infrastructure investment trusts (InvITs) to Rs 2.5 million. This brings the primary market trading lot size in line with that of the secondary market. Earlier, the minimum allotment lot for privately placed InvITs in the primary market was Rs 10 million or Rs 250 million, depending on the asset mix. In a separate amendment, SEBI has also allowed units held by related parties of the sponsor, investment manager/manager, and project manager, if they are qualified institutional buyers (QIBs), to be classified as public. Also, SEBI announced, if the net distributable cash flow generated by the holdco on its own is negative, the holdco may adjust it against the cash flows received from its underlying special purpose vehicles (SPVs), provided that it makes appropriate disclosures in this regard to the unitholders as per the regulations. Other measures include aligning submission timelines for various reports and simplifying disclosure documents. In another key announcement the SEBI approved the classification of the real estate investment trust (REIT) as equity.