Our Bureau The Securities and Exchange Board of India on Tuesday put in place a detailed framework for listed Infrastructure Investment Trusts (InvITs) to make preferential issue of units to institutional investors.

The units in a preferential issue should be offered and allotted to a minimum of two investors and maximum of 1,000 in a financial year, SEBI said in a circular, and added that the issue needs to be completed within 12 months from the date of passing of the resolution by InvIT’s unitholders.

“The preferential issue shall be made at a price not less than the average of the weekly high and low of the closing prices of the units quoted on the stock exchange during the two weeks preceding the relevant date,” SEBI said. Currently only two — IRB Infra InvIT and India Grid Trust (promoted by Sterlite Power Grid), are listed at the bourses.

InvIT, like a mutual fund, enables developers of infrastructure assets to monetise their assets by pooling multiple projects under a single entity. Individual and institutional investors can make direct investment of small amounts of money in InvITs to earn a small portion of the income as return.

Six-month norm

According to SEBI guidelines, preferential issue of InvITs cannot be made within six months.

“Further, such units have been listed on a recognised stock exchange, having nationwide trading terminal for a period of at least six months prior to the date of issuance of notice to its unitholders for convening the meeting to approve the preferential issue,” the SEBI circular added.

Besides, the allotment would not be made either directly or indirectly to any party to the InvIT or their related parties except to the sponsor, SEBI said. Also, the units allotted under preferential issue would not be sold by the allottee for a period of one year, except on a recognised stock exchange.

The investment trust will have to file placement document with stock exchanges disclosing financial details of InvITs, objects of the issue, related-party transactions, valuation report of the asset to be financed through proceeds of the issue, unit holding pattern, review of credit rating and grievance redressal mechanism.