Infrastructure Investment Trusts have been exempted from the ambit of acceptance of deposit rules under the companies law, a move that is expected to ease the compliance requirements for the investment vehicle. Regulated by markets watchdog Sebi, InvITs are expected to provide a fillip for fund raising efforts in the country’s infrastructure space. Recently, IRB Infrastructure Developers hit the markets with the first ever InvIT by any company, and few more entities are preparing to tap this route. Now, the Corporate Affairs Ministry has exempted InvITs from the purview of the Companies (Acceptance of Deposits) Rules, 2014. These rules have been framed under the Companies Act, 2013 — whose most provisions came into effect from April 1, 2014. In this regard, the ministry has amended the rules last week.
However, Real Estate Investment Trusts (REITs) have not been given any such exemption so far. Both InvITs and REITs are being seen as an alternate fund raising route for infrastructure and real estate developers amid decline in financing by banks for these projects. A senior official said discussions are going on and a decision on whether to exempt REITs from acceptance of deposit rules is yet to be taken. The Securities and Exchange Board of India (Sebi) had InvIT and REIT regulations in 2014, allowing setting up of and listing of such trusts, which are very popular in some advanced markets.
However, the response to these instruments has been relatively sluggish and the first InvIT was floated only this month, while a REIT is yet to happen. Sterlite Power Grid Ventures, Reliance Infrastructure and IL&FS Transportation Networks, among others, are expected to come out with InvITs. In a recent report, India Ratings and Research (Ind-Ra) said InvITs would allow infrastructure developers to not only deleverage their balance sheets but also refinance remaining debt at lower interest rates.