SEBI Revises Framework for Conversion of Private Listed InvIT into Public InvIT [Read Circular]

The Securities and Exchange Board of India ( SEBI ) has issued a circular revising the framework for the conversion of Private Listed Infrastructure Investment Trusts (InvITs) into Public InvITs, bringing changes to Chapter 14 of the Master Circular for InvITs dated May 15, 2024.

The regulatory authority had undertaken the review process following suggestions from market participants and recommendations from SEBI’s Hybrid Securities Advisory Committee (HySAC).

The updated framework has a primary focus on two key areas, i.e., streamlining sponsor contribution requirements and aligning disclosure and procedural norms for such conversions with those applicable to follow-on offers.

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In terms of sponsor participation, SEBI has substituted Paragraph 14.6 of the Master Circular to mandate that sponsors and sponsor groups must at all times comply with the minimum unitholding requirements set out under Regulations 12(3) and 12(3A) of the InvIT Regulations. Correspondingly, Paragraph 14.7 now specifies that the lock-in period for these units will be as per Regulation 12(5) of the InvIT Regulations.

SEBI has also effectuated amendments to several provisions to ensure consistency between conversion-related public offers and follow-on offers. Paragraph 14.3.1 now replaces the term “initial” with “follow-on” and Paragraph 14.5.1 has been revised to require that any such public issue comply with all follow-on offer requirements under the InvIT Regulations and related circulars.

Additionally, changes in Paragraphs 14.8.1 and 14.9.1 substitute references to “initial offer” and “Schedule III” with terminology and requirements applicable to follow-on offers, while Paragraph 14.9.1(a) now includes a clarification that distribution details must be disclosed “as applicable for a follow-on offer.”

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SEBI has maintained that the changes are aimed at simplifying compliance, eliminating inconsistencies and ensuring that conversions to public InvIT status are done while proper disclosure and procedural safeguards are in place.

The regulator has effectuated the changes acting under its powers conferred by Section 11(1) of the SEBI Act, 1992, read with Regulations 14(6) and 33 of the InvIT Regulations to protect investor interests and promote orderly development of the securities market.

The revised norms take effect immediately.

Click here to access the full Chapter 14 of the Master Circular to which the present changes have been effectuated.

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