Infrastructure Investment Trusts (InvITs) Regulations Analyzed

The Securities and Exchange Board of India (SEBI) recently changed some rules for how people invest in Infrastructure Investment Trusts, or InvITs. These changes are designed to make investing in InvITs safer and more organized. Specifically, the Fourth Amendment Regulations, 2025, affect who can invest and how large investments can be.

Key Points

1. New rules target investor classifications to improve InvIT stability.

2. Family trusts & intermediaries need >Rs 500 crore net worth.

3. Consistent definitions align with ICDR Regulations for clarity.

4. Strategic investors now include institutions & specific FPIs.

5. Strategic investments require a minimum 5% offer size.

6. FEMA compliance ensures legal investment participation standards.

Investor Categories Explained

Before, some groups like family trusts and certain financial companies could invest in InvITs. Now, SEBI wants to make sure these groups have enough money to handle bigger investments. The new rules say that family trusts and other intermediaries must have a net worth of over Rs 500 crore to be officially recognized. This means these groups need to be financially strong before they can invest in InvITs.

Standardizing Definitions

SEBI has also made sure that the rules about “qualified institutional buyers” match the rules set out in the 2018 ICDR Regulations. This helps to avoid confusion and makes sure everyone is following the same guidelines. It ensures that investment standards are consistent and predictable.

Strategic Investor Changes

The definition of a “strategic investor” has been expanded to include a wider range of investors. Now, institutional investors, certain foreign portfolio investors, and regulated Non-Banking Financial Companies (NBFCs) can also be strategic investors. This opens up the market and offers more options for investors.

Investment Minimums

Strategic investors are now required to invest at least 5% of the total amount being offered in an InvIT. This helps to ensure that the initial investment is widely supported and avoids a situation where a small group controls a large portion of the InvIT. FEMA compliance is a crucial part of this process, guaranteeing all investments adhere to foreign exchange regulations.

Investing in InvITs through these updated regulations provides a more regulated and secure investment environment.