SEBI Notifies Second Amendment to Infrastructure Investment Trusts Regulations, 2025 [Read Notification]

The Securities and Exchange Board of India (SEBI) has notified the Second Amendment to the SEBI (Infrastructure Investment Trusts) Regulations, 2025, bringing a huge update to how Infrastructure Investment Trusts (InvITs) can manage and invest unutilized funds.

The amendment modifies Regulation 18(4) and expands the scope of permissible investments under Regulation 18(5)(b) and retrospective effect from April 2, 2025.

What Changed?

Regulation 18(4) governs how certain InvITs—specifically those privately placed under Regulation 14(2)—must allocate their funds. It requires that at least 80% of InvIT assets be invested in eligible infrastructure projects. A proviso allows the remaining funds to be invested in specific instruments listed in Regulation 18(5)(b).

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The amendment expands this proviso, changing the investment clause from:

“…under sub-clause (ii), (iii), (iv) and (v)…”

to:

“…under sub-clause (ii), (iii), (iv), (v), (vi), (vii), and (viii)...”

What Are These New Options?

Here’s what sub-clauses (vi) to (viii) now allow InvITs to invest in:

(vi) Unlisted equity shares of a company that provides project management and related services, with two conditions:

• The services are offered exclusively to the InvIT, its HoldCos, and SPVs.
• The InvIT (directly or via HoldCos/SPVs) holds 100% ownership in the company.

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(vii) Units of liquid mutual fund schemes that:

• Have a credit risk value of at least 12, and
• Fall under Class A-I in SEBI’s potential risk class matrix.

(viii) Interest rate derivatives (e.g., interest rate futures, swaps, FRAs), provided:

• They are used solely to hedge interest rate risk on existing borrowings, in line with Indian Accounting Standards.
• The InvIT participates only as a user/client, not as a trader or market maker.
• These are properly disclosed in annual reports.
• Mutual fund valuation norms apply.
• RBI regulations for derivative users are followed.

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Additionally, a new clause (bb) in Regulation 18(6) mandates that:

“Cash flows generated by all InvIT assets shall be considered.”

This ensures comprehensive assessment of income sources when calculating returns for investors.

The changes offer more flexibility in managing surplus capital and help InvITs hedge financial risks more effectively. These changes also encourage in-house project management capacity and improve investor protection through disclosures and stricter usage conditions.

Legal and investment advisors to InvITs will need to update internal policies, recheck compliance conditions, and evaluate any unutilized funds in light of these new investment options.

To Read the full text of the Notification CLICK HERE

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