MUMBAI: Looking to attract more investments into the infrastructure sector, market regulator Sebi today proposed to set up a separate framework for Infrastructure Investment Trusts.
Issuing draft norms for Infrastructure Investment Trusts (InvITs), Sebi said the new framework can be on the lines of Mutual Fund or by brining these new trusts under REIT (Real Estate Investment Trusts) model, a popular instrument for raising funds in the realty sector, or having an entirely separate set of norms.
The Securities and Exchange Board of India (Sebi) has received various suggestions for coming out with a framework for InvITs. Based on suggestions received, the regulator is "examining a structure which would provide an additional framework for investment in infrastructure in the country."
Sebi said "infrastructure is the cornerstone of development of any country," and India requires an investment in Infrastructure sector of around Rs 65 lakh crore during 2012-2017.
"InvITs shall be set up as a Trust under the provisions of the Indian Trusts Act, 1882," as per the consultation paper and draft norms issued by the regulator.
"It shall have parties including Trustee, sponsor, project managers, independent engineers, etc," it added.
InvITs would be allowed to list on stock exchanges through Initial Public Offer (IPO) and can raised funds further through Follow-On Offers, right issues, bonus issues, preferential allotments or any other route as prescribed by Sebi.
For the initial offering of any InvIT, the size of the proposed projects shall not be less than Rs 1,000 crore in a bid to ensure that initially only large and established players enter the market.
Further, the minimum issue size for such InvITs shall be Rs 250 crore.
The regulator has sought public comments on the draft norms by January 20, 2014.
Globally, framework for InvIT exists in several countries, including Singapore and Hong Kong.
"Given the challenging phase of infrastructure in the country today, InvITs are proposed to provide a suitable structure for financing/refinancing of infrastructure projects in the country," Sebi noted.