India allows listed infra trusts to raise debt

After the country’s first two ‘InvITs’ debuted in the first half of the year, other companies are considering following suit.

The Securities and Exchange Board of India, the country’s capital markets regulator, is now allowing infrastructure investment trusts (InvITs) to raise capital by issuing debt securities, the watchdog said in a release following yesterday’s board meeting. 

The change is part of a wider package of amendments for InvITs and REITs, which will allow the latter to lend to underlying holding companies and special-purpose vehicles, as well as set-up single-asset REIT structures.

InvITs are listed vehicles structured to distribute at least 90 percent of the cash generated by operating infrastructure assets to shareholders in a manner similar to REITs. 

India introduced InvITs in 2014 to help unlock capital for infrastructure projects. It took until September 2016, however, for road developer IRB Infrastructure to create the country’s first InvIT, following updated guidelines from the SEBI. 

So far, there are two InvITs: the IRB InvIT and India Grid Trust, managing operational roads and transmission assets, respectively. The listed structures have collected more than $1 billion from retail and institutional investors through their initial public offerings. 

Several Indian infrastructure companies said they are considering InvITs to raise capital for their assets. Reliance Infrastructure, for example, filed draft offer documents with SEBI in May this year for a portfolio of seven toll roads in India.