The Securities and Exchange Board of India (SEBI) continues its efforts to enhance transparency, accountability, and investor protection in the infrastructure investment space. In this direction, the regulator has notified the Securities and Exchange Board of India (Infrastructure Investment Trusts) (Third Amendment) Regulations, 2025, which amends the original InvIT Regulations, 2014. These changes were published in the Official Gazette and came into effect immediately upon publication.
Here’s a summary of the key changes and what they mean for stakeholders in the InvIT ecosystem:
- Definition of “Public” Revisited
A critical amendment involves redefining the term “public” under Regulation 2(1)(zq). The revised definition excludes related parties of the InvIT, its sponsor, investment manager, or project manager. However, if such excluded entities are Qualified Institutional Buyers (QIBs) participating in an offer, they will be treated as public. Importantly, sponsors, sponsor group, investment manager, and project manager are expressly excluded from being considered public, regardless of other conditions.
Impact: This change helps clarify the categorization of investors, improving disclosure and ensuring accurate representation of public ownership in InvITs.
- Flexible Reporting Timelines
Multiple provisions (Regulations 10, 14, 21, 23) now replace rigid quarterly deadlines with the phrase “such time as may be specified by the Board for submission of quarterly financial results.”
Impact: This introduces greater flexibility for InvITs and aligns timelines with SEBI’s future directives, potentially easing compliance burden while maintaining transparency.
- Valuation Reporting Enhancements
New requirements mandate:
Simultaneous submission of valuation reports to both trustees and stock exchanges.
Quarterly valuations for InvITs with borrowings exceeding 49% of their asset value, covering quarters ending June, September, and December.
Clarification that half-yearly valuations (as of September 30th) can substitute the quarterly report for that period.
Impact: These changes aim to tighten risk monitoring for highly leveraged InvITs, ensuring investors receive timely insights into asset valuations and financial health.
- Minimum Investment Threshold Revised
The minimum investment amount in a privately placed InvIT has been lowered from ₹1 crore to ₹25 lakhs.
Impact: This significantly broadens investor participation, making InvITs more accessible to high-net-worth individuals and family offices, not just large institutions.
- Clarifications on Distribution and Cash Flows
If a HoldCo’s own cash flow is negative, it may now offset losses with income from underlying SPVs, provided disclosures are made to unitholders in a SEBI-specified format.
Impact: This change accommodates real-world operating conditions while maintaining transparency and unitholder confidence.
- Reporting Requirements for Highly Leveraged InvITs
A new quarterly reporting requirement has been introduced (Regulation 23(4A)) for InvITs with consolidated borrowings above 49%, applicable for June, September, and December quarters.
Impact: This supports SEBI’s push for risk-based supervision and ensures consistent disclosures from riskier InvITs.
Conclusion
The Third Amendment Regulations, 2025 signal SEBI’s commitment to evolving the regulatory framework in step with market realities. These changes prioritize transparency, risk management, and greater inclusivity for investors. While they demand higher compliance rigor from InvIT managers, they also open the door for wider participation and better governance across the board.
For investors and stakeholders, staying updated on these amendments is crucial to navigating the InvIT space effectively in 2025 and beyond.