Category: Ruchir Sinha
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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 …
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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)…
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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…
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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…
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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…
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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…
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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?…
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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…
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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, etc….
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Listed or Unlisted InvITs – Which way to go?
Tracking evolution of InvITs – resurgence and success Debate between private listed and unlisted InvITs – which way to go? Unlisted InvITs remain attractive for investors seeking tax optimal returns and deregulated landscape…