Description

SEBI amends InvIT regulations to modify definitions of promoter, qualified institutional buyer, and strategic investor, including new networth requirements and investor categories.

Summary

SEBI has notified the Securities and Exchange Board of India (Infrastructure Investment Trusts) (Fourth Amendment) Regulations, 2025, effective from the date of publication in the Official Gazette (December 9, 2025). The amendment modifies key definitions in the InvIT Regulations 2014, including changes to the definition of ‘promoter’, ‘qualified institutional buyer’, and ‘strategic investor’, introducing specific networth requirements and expanding eligible investor categories.

Key Points

  • Amendment to Regulation 2 of SEBI (Infrastructure Investment Trusts) Regulations, 2014
  • Modified definition of ‘promoter’ to include family trusts or SEBI-registered intermediaries with networth exceeding Rs. 500 crore based on last audited financial statements
  • Revised definition of ‘qualified institutional buyer’ to align with SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018
  • Expanded definition of ‘strategic investor’ to include institutional investors, foreign portfolio investors (not covered under institutional investors), RBI-registered NBFCs (Middle Layer, Upper Layer, and Top Layer), and entities specified by SEBI
  • Strategic investors must invest at least 5% of total InvIT offer size or amount specified by SEBI
  • Compliance with FEMA 1999 and related rules/regulations/guidelines required for strategic investors
  • SEBI to consult with relevant financial sector regulators before categorizing entities under strategic investor category

Regulatory Changes

Amendment to Definition of Promoter (Regulation 2(1)(mk)(ii)):

  • Promoter now includes family trusts or SEBI-registered intermediaries with networth exceeding Rs. 500 crore as per last audited financial statements

Amendment to Definition of Qualified Institutional Buyer (Regulation 2(1)(ydh)):

  • Definition now aligned with Regulation 2(1)(dhh) of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018

Amendment to Definition of Strategic Investor (Regulation 2(1)(yyk)): Strategic investor includes:

  • Institutional investors
  • Foreign portfolio investors not covered under institutional investors category
  • Non-Banking Financial Companies (NBFCs) registered with RBI from Middle Layer, Upper Layer, and Top Layer
  • Entities as specified by SEBI from time to time

Investment requirement: Minimum 5% of total InvIT offer size (individually or collectively) or amount specified by SEBI, subject to FEMA 1999 compliance

Regulatory consultation: SEBI shall consult with relevant financial sector regulators before including entities from other regulated sectors under strategic investor category

Compliance Requirements

  • InvIT sponsors and managers must comply with amended definitions of promoter, qualified institutional buyer, and strategic investor
  • Entities seeking strategic investor status must meet minimum investment threshold of 5% of offer size
  • Foreign entities must ensure compliance with Foreign Exchange Management Act, 1999 and related provisions
  • NBFCs must be registered with RBI and belong to Middle Layer, Upper Layer, or Top Layer categories
  • Family trusts or intermediaries claiming promoter status must demonstrate networth exceeding Rs. 500 crore through audited financial statements

Important Dates

  • Notification Date: December 9, 2025 (published in Official Gazette)
  • Effective Date: December 9, 2025 (date of publication in Gazette)
  • Reference to Original Regulations: SEBI (Infrastructure Investment Trusts) Regulations, 2014 first published on September 26, 2014

Impact Assessment

Market Impact:

  • Expansion of strategic investor definition may increase participation in InvIT offerings from NBFCs and FPIs
  • Higher networth requirement (Rs. 500 crore) for promoters may limit eligibility for smaller entities
  • Alignment with ICDR Regulations provides regulatory consistency across securities markets

Operational Impact:

  • InvIT managers need to update investor classification and eligibility criteria
  • Enhanced due diligence required for verifying strategic investor credentials and networth of promoters
  • Coordination with financial sector regulators for entity categorization

Compliance Impact:

  • Existing InvITs may need to reassess promoter and investor classifications
  • Enhanced documentation requirements for networth verification and regulatory compliance
  • FEMA compliance verification becomes mandatory for strategic investors

Impact Justification

Regulatory amendment affecting InvIT framework definitions and investor eligibility criteria, impacting institutional and strategic investor participation