INSUBCONTINENT EXCLUSIVE:
Capital markets regulator Sebi on Monday decided to amend its investment manager eligibility norms for Infrastructure Investment Trusts and
also permit fast-track issuance of units to existing investors in REITs and InvITs
The changes in the eligibility norms, approved by Sebi's board at a meeting here, will help a mega offering worth an estimated Rs 20,000
crore by the National Highways Authority of India (NHAI), which is in the process of setting up an Infrastructure Investment Trust (InvIT)
to monetise its completed public-funded national highways
The board approved a proposal to revise eligibility conditions for investment managers in InvITs and for streamlining the process of rights
issue of REITs and InvITs, the regulator said after the meeting
At present, InvIT regulations require the investment manager to have at least 5 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 least 30 years of directors, partners and employees of the
investment manager, even if it is a newly created entity
The Securities and Exchange Board of India (Sebi) has been receiving representations from the industry and the market participants for
considering alternative measures for relevant experience of the investment manager and considering the experience of employees or directors
for meeting the experience criteria
In one such representation, NHAI had told the regulator that it is considering to set up an InvIT for monetising its completed
public-funded national highways and it has proposed to set up a new company to act as the investment manager for the proposed InvIT
The 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, which would act as the investment manager, is also proposed to have five managerial-level employees, each having at least
5 years of experience in development of infrastructure or highways
While the intent of Sebi regulations prescribing experience requirement was to ensure that the investment manager had requisite expertise,
the present norms do not permit a new entity even if it had sufficient number of experienced personnel to meet the regulatory intent, the
Accordingly, Sebi decided that an alternative measure of the experience can be considered which can be defined in terms of multiple of the
combined experience of the directors, partners and employees of the investment manager
While the combined experience requirement of the investment manager (IM) currently stands at 15 years (5 years for the IM and 5 years each
for 2 employees), Sebi proposed that the alternative measure can be made stricter at two times of the current combined requirement at 30
years to be met by directors/partners/employees having individual experience of at least 5 years
"This 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
For fast-track rights issue, the current regulations 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 Sebi's observations if
they are in compliance with the continuous listing and disclosure requirements and certain other conditions
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.