Capital markets regulator Securities and Exchange Board of India (Sebi) has eased borrowing norms for Infrastructure Investment Trusts (InvITs) and relaxed rules for special purpose vehicles (SPVs) linked to completed or terminated infrastructure projects.

The regulator said InvITs with net borrowings exceeding 49 per cent of the value of assets will now be allowed greater flexibility in the use of debt. The expanded scope includes borrowings for improving asset performance, augmenting project capacity, undertaking major maintenance expenses for road projects and refinancing existing debt, subject to specified conditions, according to a report by Business World.

SEBI clarified that refinancing would be permitted only for the principal portion of the original debt and only where the initial borrowing was raised for permitted purposes. The regulator added that interest costs, penalties and other charges would not qualify under the refinancing relaxation.

Additional Disclosure Requirements
In a separate circular, Sebi eased norms for SPVs holding infrastructure projects whose concession agreements have ended or been terminated.

The regulator said such SPVs would continue to retain their classification as SPVs provided the InvIT exits the investment or acquires a new infrastructure project in the SPV within one year.

According to Sebi, the one-year timeline would begin after the later of project completion, conclusion of pending litigation or tax assessments, or completion of the defect liability period. The regulator also said the time taken for regulatory approvals related to sale, merger, liquidation or winding-up of the SPV would be excluded from the calculation.

SEBI further mandated additional disclosures by InvITs regarding such SPVs, including details of liabilities, pending claims, debt repayment schedules and exit plans.

The regulator has asked InvITs to disclose “a clear plan of action detailing how and when the InvIT intends to exit its investment in the SPV or plans to acquire new infrastructure projects.”

Both measures follow amendments made to the InvIT regulations in April this year to expand the permissible use of borrowings above the prescribed threshold and allow SPVs linked to completed infrastructure projects to continue retaining SPV status under certain conditions.

The changes come amid continued growth in the InvIT market, with infrastructure developers increasingly using the structure to monetise operational assets and raise long-term capital.