Sebi expands the scope of public unitholding requirement in InvITs. Details here

There are already nine different methods to achieve minimum public unitholding requirement for infra investment trusts which were prescribed in a master circular dated July 6, 2023.

A new method

In addition to these methods, the markets regulator has recently added one more method for privately placed InvITs in order to achieve minimum public unitholding requirement.

The new method will be the issuance of units through preferential allotment. However, only units issued to the public will be considered for compliance with minimum unitholding requirements.

The provisions of this circular will come into effect with immediate effect. The Sebi told recognised stock exchanges to disseminate the provisions of this circular. 

What are InvITs?

InvITs are investment vehicles that pool money from investors and invest it in income-generating infrastructure assets, such as roads, bridges, power plants, and airports. 

The primary objective of InVITs is to generate income through the rental and toll income from these assets. InVITs are managed by an asset management company that oversees the operations of the trust and distributes the income to the investors.

InvITs work on the same principle as REITs. The trust acquires infrastructure assets from the sponsor or the developer, who may be a government entity or a private company. The AMC manages the assets, collects the rent or toll, and distributes the income to the investors in the form of dividends.

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Updated: 01 Nov 2023, 05:20 PM IST