Capital markets regulator Sebi on Tuesday notified a framework for issuance of subordinate units by privately placed infrastructure investment trusts (InvITs). The issuance of subordinate units is primarily intended to bridge the valuation gaps that may arise as a result of the difference in the valuation of an asset assessed by the Sponsor (in its capacity of the asset seller) and the InvIT (in capacity of the asset buyer).
Also, the framework has been designed to include risk mitigation measures in respect of such units.
In its notification on Monday, Sebi said subordinate units would only be issued by a privately placed InvIT upon acquisition of an infrastructure project.
It further said that InvIT would not raise funds through public issues if any subordinate units have been issued and are outstanding. To give this effect, the Securities and Exchange Board of India (Sebi) has amended the InvITs rule.
InvITs are a new concept in the Indian market but have been a popular choice…
