Sebi likely to ease Invit, Reit framework

Sebi likely to ease Invit, Reit framework

The Securities and Exchange Board of India (Sebi) is looking at ways to revive the infrastructure investment trust (InvIT) market.After two listings earlier this year, the fortunes of the newest investment vehicle that helps cash starved infrastructure companies raise capital by transferring assets and listing them as InvITs have seen as lump.

No companies are coming forward with InvIT plans, while the trading volumes on the two existing ones —India Grid Trust and IRB InvIT Fund —have dried up.Sources say Sebi at its board meeting on Thursday could announce relaxations in the InvIT and real estate investment trust (ReIT) framework.

Tax clarity, changes in the minimum ticket size, and allowing pension funds to participate are some demands made by players operating in this space.In the past two years, the Centre and Sebi have taken measures to boost the market.But more can be done, say industry players.

The recent provisions around the fair market value (FMV) of unlisted shares have unexpectedly created tax concerns among InvIT sponsors.According to the new rules, for taxation purposes the FMV of the unquoted shares will be used against the earlier practice of book value.

While coming up with an InvIT,a sponsor typically creates a special purpose vehicle (SPV) which is unlisted.The SPV then transfers the shares to the InvIT.While earlier the book value of assets was being used as a benchmark, under the new rules the tax incidence is expected to be much higher as the fair value of the asset will be taken into consideration.

“While most of the taxation related issues for InvITshave been resolved, some ambiguities —specifically sections 50CA, and 56(2)(x) of the IncomeTax Act –remain, which raise an issue.Due to this, in some cases, there can be double taxation, i.e. on both the sponsor and the InvIT in case the transfer value is lower than the derived FMV.

To avoid this, while transactions can happen above the fair market value, this in turn would adversely impact InvIT´s yield and consequently investors´ interest,” said Shubham Jain, vicepresident, corporate ratings, ICRA.When it comes to taxation, there is not much Sebi can do.

However, there are areas, such as reduction in the investment ticket size, where Sebi can provide some relief, say experts.The liquidity in the two listed InvITshas been drying up due to the bigger lot size. For instance, the average daily volume in the India Grid Trust fell from Rs 210 crore in June to Rs 50 crore in December.

Similarly, the average daily volume in IRB Invit has fallen from Rs 260 crore in June to Rs 79 crore in December.The minimum ticket size for participating in an Invit is Rs 10 lakh. The high ticket size acts as an entry barrier to discourage smaller retail investors from investing in these products as they are don´t have the knowledge about the product and risks involved in it. “InvITs are complex products and many smalltime investors might not be able to understand risks.

However, an unintended consequence of this rule has been poor liquidity.Sebi should consider lowering the entry size to at least Rs 2 lakh or Rs 5 lakh so that more and more investors can participate,” said a banker.There has been a lot of talk about allowing the Employees´ Provident Fund Organisation (EPFO) to invest in the InvIT space.Sources say while Sebi has expressed no concerns about the proposal, the Ministry of Labour and Employment is yet to take a call.

The Business Standard, New Delhi, 26th December 2017

Credit card spending growth declines on RBI gaze, stress build-up

Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the...

Brigade Hotel Ventures files draft papers with Sebi for Rs 900 crore IPO

Brigade Hotel Ventures Ltd, owner and developer of hotels in South India, has filed draft papers with capital markets regulator Sebi to raise Rs 900 crore through an initial public offering (IPO).The proposed IPO is entirely a fresh issue of equity shares with no Offer-for-Sale (OFS) component, according to the draft red herring prospectus (DRHP).Proceeds from the issue to the tune of Rs 481 crore will go towards payment of debt, Rs 412 crore will be allocated to the company and Rs 69 crore to its material subsidiary, SRP Prosperita Hotel Ventures Ltd.Additionally, Rs 107.52 crore will be used to purchase an undivided share of land from the Promoter, BEL, and the remaining funds will support acquisitions, other strategic initiatives, and general corporate purposes.The company may raise up to Rs 180 crore through a Pre-IPO Placement. If the placement is undertaken, the issue size will be reduced.Brigade Hotel Ventures Ltd is a wholly-owned subsidiary of Brigade Enterprises ...

Govt invites applications for RBI deputy governor's post, last date Nov 30

The government has invited applications for the post of deputy governor of Reserve Bank of India from interested candidates with at least 25 years of experience and below 60 years of age as on January 15, 2025.One of the deputy governors, Michael Patra’s current term will end on January 15.According to an advertisement, candidates should have at least 25 years of work experience in Public Administration, including experience at the level of secretary or equivalent in the Government of India, or persons who have at least 25 years of work experience in an Indian or International Public Financial Institutions; or persons of exceptional merit and track record at the national or international level in the relevant field.The last date of submission of the application is November 30, 2024. It has been clarified that the Financial Sector Regulatory Appointments Search Committee (FSRASC) – a body which will select the candidates- is free to identify and recommend any other person a...

CA Online

Search This Blog