CIRCULAR
SEBI/HO/DDHS/DDHS-PoD-2/P/CIR/2025/44 March 28, 2025
To,
Bharat InvIT Association
All Infrastructure Investment Trusts (InvITs)
All Parties to InvITs
All Recognised Stock Exchanges
All Depositories
Madam / Sir,
Subject: Amendment to Master Circular for Infrastructure Investment Trusts
(InvITs) dated May 15, 2024
(A) Review of lock-in provisions for preferential issue of units for
Infrastructure Investment Trusts (InvITs)
1. Regulations 12(3) of the SEBI (Infrastructure Investment Trusts)
Regulations, 2014 (“InvIT Regulations”) inter-alia require the sponsor(s) and
sponsor group(s) to hold a minimum of 15% of the total units of the InvIT1,
for three years from the date of listing of units in the initial offer.
2. However, Para 7.6.1. of the Master Circular for InvITs dated May 15, 2024,
dealing with the lock-in requirement applicable at the time of preferential
issue of units by a InvIT, requires as under:
“The units allotted to sponsor(s) and its associates shall be locked-in for a
period of three years from the date of trading approval granted for the units:
Provided that units not more than twenty-five percent of the total unit capital
1 25% of the total units in case the sponsor / associate of sponsor is not the project manager of the InvIT for a
minimum period of three years from the date of listing of units of the InvIT.
of the InvIT shall be locked-in for three years from the date of trading
approval:
Provided further that units allotted in excess of twenty-five percent of the
total unit capital of the InvIT shall be locked-in for one year from the date of
trading approval.
Explanation: For the computation of the lock-in requirement, the units held
by the sponsor(s) and locked-in for three years, in the past in terms of
Regulation 12(3) of the InvIT Regulations shall be taken into account. The
units locked-in pursuant to Regulation 12(3) of the InvIT Regulations shall
not be put under fresh lock-in again, even though they are considered for
computing the lock-in requirement, in case the said units are free of lock-in
at the time of the preferential issue.”
3. It has been represented by the industry associations to align the quantum of
units required to be locked-in under the guidelines for preferential issue of
units for InvITs with Regulation 12(3) of the InvIT Regulations applicable at
the time of initial offer.
4. Accordingly, in order to promote ease of doing business and based on the
recommendations of Hybrid Securities Advisory Committee (HySAC), the
Para 7.6.1. of the Master Circular for InvITs dated May 15, 2024 is amended,
as under:
“7.6.1. The units allotted to sponsor(s) and sponsor group(s) shall be locked-
in as under:
a) fifteen percent of the units allotted to sponsor(s) and sponsor group(s)
shall be locked-in for a period of three years from the date of trading
approval granted for the units, subject to the condition that the project
manager of the InvIT is the sponsor or an associate of the sponsor and
shall continue to act in such capacity for a period of minimum three years
from the date of trading approval granted for the units unless suitable
replacement is appointed by the unitholders through the Trustee;
Provided that twenty-five percent of the units allotted to sponsor(s) and
sponsor group(s) shall be locked-in for a period of three years from the
date of trading approval granted for the units if the condition specified
above relating to project manager of the InvIT is not satisfied;
b) the remaining units allotted to sponsor(s) and sponsor group(s) shall be
locked-in for a period of one year from the date of trading approval
granted for the units.
Provided that the sponsor(s) and sponsor group(s) shall comply with the
minimum unitholding requirement specified in Regulation 12(3) and
12(3A) of SEBI (Infrastructure Investment Trusts) Regulations, 2014, at
all times”
5. Further, based on the request of industry associations and
recommendations of HySAC with respect to permitting inter-se transfer of
locked-in units among sponsor and sponsor groups, the following provision
is inserted as new sub-paragraph under Para 7.6 of the Master Circular for
InvITs dated May 15, 2024:
“7.6.5. Units allotted under a preferential issue to a sponsor or its sponsor
group entities which are subject to lock-in, may be transferred among such
sponsor or its sponsor group entities, subject to the condition that the lock-
in on such units shall continue for the remaining period with the transferee
and such transferee shall not be eligible to transfer such units till the expiry
of the lock-in period originally applicable to such units.
Explanation: In case of an InvIT with multiple sponsors, locked-in units held
by a sponsor or its sponsor group entities shall be permitted to be transferred
only within such sponsor or its own sponsor group entities and not to any
other sponsor or their sponsor group entities.
Provided further that in the event of a change in sponsor, the locked-in units
held by the outgoing sponsor or its sponsor group entities may be transferred
to the incoming sponsor or its sponsor group entities, subject to the condition
that the incoming sponsor or its sponsor group entities shall continue to
comply with the minimum unitholding requirements as specified under the
InvIT Regulations after such transfer.
Provided further that in case of conversion to a self-sponsored investment
manager, the locked-in units held by the outgoing sponsor or its sponsor
group entities may be transferred to the self-sponsored investment manager
or its shareholders or group entities of the self-sponsored investment
manager, subject to the condition that the self-sponsored investment
manager or its shareholders or group entities shall comply with the minimum
unitholding requirements as specified under the InvIT Regulations after such
transfer.”
(B) Guidelines for follow-on offer by publicly offered InvITs
6. Regulation 14(4)(b) of the InvIT Regulations inter-alia provides follow-on
offer as one of the mechanism for raising funds subsequent to issue of units
after initial public offer and in the manner specified by the Board.
7. Regulation 2(1)(p) of the InvIT Regulations defines follow-on offer as under:
“ "follow–on offer” means offer of units of an InvIT to the public for
subscription and includes an offer for sale of InvIT units by an existing unit
holder to the public;”
8. It has been represented by the industry associations to provide a regulatory
framework for undertaking follow-on offer by a publicly offered InvIT. They
have also suggested a framework for undertaking fast track follow-on offer
with the aim to make the fund raising more efficient.
9. In order to promote Ease of Doing Business and based on the representation
and inputs received from industry associations and recommendations of
HySAC, following provisions are inserted to modify Chapter 2, titled
“Guidelines for public issue of units of InvITs” of the Master Circular for
Infrastructure Investment Trusts dated May 15, 2024:
“Follow-on Offer
2.17. The provisions specified in Chapter 2 of this Master Circulars which
are applicable for public issue of units of InvIT are also applicable for
follow-on offer by an InvIT.
2.18. For issuing units through a follow-on offer, the InvIT shall pay fees to
the Board as specified in Schedule II of InvIT Regulations along with
follow-on offer document / draft follow-on offer document, as
applicable.
2.19. An InvIT desirous of issuing units by way of follow-on offer shall, for
any such issue, ensure that:
2.19.1. It has made an application to all stock exchanges on which
its units are listed, to seek an in-principle approval for listing
of its units on such stock exchanges and has chosen one
of them as the designated stock exchange.
2.19.2. Units shall be issued mandatorily in dematerialized form.
2.20. The Investment Manager and the merchant banker(s) shall be
responsible for obtaining in-principle approval and final listing and
trading approvals from the stock exchange(s).
2.21. The amount for general purposes, as mentioned in objects of the issue
in the follow-on offer document filed with the Board shall be as
specified under clause (va) of sub-regulation (4) of Regulation 14 of
the InvIT Regulations.
2.22. The minimum public unitholding shall be at least twenty-five percent of
the total outstanding units of the InvIT on post issue basis..
2.23. The provisions of Regulation 15 of the InvIT Regulations shall be
applicable for follow-on offer document and advertisements in relation
to a follow-on offer.
2.24. Allotment and Listing of units: The timelines for allotment and listing of
units of InvIT shall be as per the timelines specified in case of initial
public offer as mentioned in Chapter 2 of the Circular on Master
Circular for InvITs.
2.25. Payment of interest in case of failure to allot or list units: The provisions
specified under clauses (t) and (u) of sub-regulation (4) of Regulation
14 of the InvIT Regulations shall be applicable mutatis mutandis
pertaining to, payment of interest in relation to a follow-on offer in case
of failure to allot or list units.
2.26. Restriction on further issue of units: An InvIT shall not undertake any
further issue of units in any manner whether by way of public issue,
rights issue, preferential issue, institutional placement or otherwise,
except pursuant to a unit based employee benefit scheme (if any)
during the period between the date of filing of the draft follow-on offer
document/ follow-on offer document for follow-on offer and the listing
of the units or refund of application monies:
2.27. The provisions of Chapter 3 of this Master Circular shall apply in
relation to the disclosure of financial information in the follow-on offer
document except Section (B) (provisions pertaining to disclosure of
projections of InvITs Revenues and Operating Cash flows) and
Section (G) (Principles for preparation of combined financial
statements)."
2.28. Filing of offer document for issuing units through a follow-on offer
(‘follow-on offer document’)
2.28.1. The InvIT shall file the draft follow-on offer document, through the
merchant banker with the Board, for its observations. The
timelines for issuance of observations shall be as specified under
Chapter 2 of the Master Circular for InvITs. The draft follow-on
offer document shall also be filed with the recognized stock
exchange, through the merchant banker.
2.28.2. The follow-on offer document, after incorporating the observations
of SEBI, shall be filed with the Board and recognized stock
exchanges.
2.29. Submission of due diligence certificate to the Board
2.29.1. The merchant banker shall, along with the filing of the draft follow-
on offer document, furnish to the Board, due diligence certificate
as per Form A and Form B of Annexure -1 of the Master Circular
for InvITs.
10. This circular shall come into force with immediate effect.
11. This circular is being issued in exercise of powers conferred under Section
11(1) of the Securities and Exchange Board of India Act, 1992 and
Regulation 14(4)(b), 14(4)(I) and 33 of the SEBI (Infrastructure Investment
Trusts) Regulations, 2014. This circular is issued with the approval of the
competent authority.
12. The recognized Stock Exchanges are advised to disseminate the contents
of this Circular on their website.
13. This Circular is available on the website of the Securities and Exchange
Board of India at www.sebi.gov.in under the category “Legal” and under the
drop down “Circulars”.
Yours faithfully
Ritesh Nandwani
Deputy General Manager
Department of Debt and Hybrid Securities
Tel No.022-26449696
Email id - riteshn@sebi.gov.in