Smart meters: The basic infrastructure for a green future

  • Smart meters are essentially a data play – offering unprecedented data that can be used to bring online more green energy, curb electricity loses and reduce costs for consumers.
  • The sector has immense depth – USD 30 bn over just the next 2-3 years….

    Investing into Infrastructure Holding Companies: What if you become a core investment company?

    • Infrastructure companies are mandated to execute concessions through SPVs, which often results in qualification of the holding company as a core investment company (CIC)
    • CIC risk is often avoided by structuring EPC and O&M revenues through the hol- ding company and swelling …

      Ambiguity with thin cap norms: Private credit players risk significant tax leakage

      • Accurate reading of thin capitalization norms is highly relevant to maximize IRRs, especially in asset heavy sectors
      • Currently, norms interpreted such that sometimes the entire interest paid to foreign related parties is disallowed for the target (as expense)…

        Budget 2023: Impact on InvITs

        • Distributions out of repayment of debt principal could now be taxed as ‘other income’ – at odds with global standards
        • Distributions out of debt repayments through redemption of units not treated as ‘income’, but reduce cost of acquisition – InvIT / REIT Regulations do not permit redemption of units…

          Private Funds: SEBI introduces investor diligence requirements for AIFs

          • SEBI has cast new investor diligence obligations on AIF managers, which extends to underlying investors
          • As per the new rule, the manager of an AIF is not permitted to on-board new investors or draw down capital from existing investors unless the diligence conditions have been complied with…

            EduInfra – Emergence of a new asset class

            • EduInfra offers a promising 10 – 11% entry cap rate for annuity investors with rental escalations in the region of 3
              – 5%

            • Infrastructure classification allows for tax optimal exit through InvITs
            • Seller awareness needed – operators slowly moving towards asset light models; depth, but potential…

              Investor or developer? Real estate regulator (RERA) classifies real estate fund as a promoter

              • The term ‘causes to construct’ in the definition of ‘promoter’ under RERA has been interpreted to include private funds exercising rights typical to such investments

              • Protective rights of investors have been interpreted as being secondary to the rights of the homebuyers – in a conflict, the latter should be protected, notwithstanding inter-se contractual relationship between developer and fund…

                What’s Holding Back Indian Fund Managers From Raising Global Capital?

                • Indian fund managers, thus far restricted, may now be able to setup India-focussed offshore funds
                • Is investment by resident individuals in offshore funds now restricted, even under LRS? Not quite – we address the ambiguity
                • Will GIFT now emerge as the most favoured jurisdiction for setup of India-focussed funds?…

                  GP-Led Secondaries in India – Considerations and Challenges

                  • GP-led secondaries have become fairly popular globally given that they solve for the liquidity concerns among some LPs whilst allowing the GP to capture more upside from an investment.

                  • In a GP- led secondary deal, it is important to find a pricing that works for the exiting investors but keeps the acquisition attractive for the incoming investors…

                    Private Credit: Interest on NCDs recharacterized as dividends 

                    • Tax authorities recharacterized interest income on NCDs as dividends
                    • Interest recharacterization has not taken place under GAAR
                    • Investors can prevent such mischaracterization by demonstrating the nature of the underlying instrument, periodicity of payments, maturity date, management rights,