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SEBI’s Public Float for Private Unlisted InvITs – an instance of Regulatory Overreach?

Infrastructure development has been a focal point for the Narendra Modi government. Indian infrastructure has historically failed to attract large offshore capital due to various systemic reasons – one such reason being the lack of a well-governed tax optimal investment structure. To address this, the Securities and Exchange Board of India introduced public or privately listed infrastructure investment trusts allowing for a SEBI governed tax-optimised investment regime. To provide a more flexible regime for sophisticated investors, SEBI introduced the concept of ‘unlisted’ InvITs. Unlisted InvITs regime was a tax-optimal investment regime for global investors with SEBI oversight (to inspire investor confidence) with light-touch regulations. Within a short span of time, the industry has already witnessed two large unlisted InvITs.

Just as unlisted InvITs became the flavour, SEBI has significantly eroded the very idea and lucrativeness of unlisted InvITs with its recent amendments including the introduction of a 25% public float.

Please click here  to read our article analysing the amendments and reasons why the amendments strike at the core of the unlisted InvIT regime.

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