The Securities and Exchange Board of India, or Sebi, on Wednesday released norms for public issue of units of infrastructure investment trusts, or InvITs, in an effort to make it easier for cash-starved developers to raise capital from the public.With this, Sebi has cleared the path for developers to go ahead with the launch of InvITs, industry experts said.

Several firms such as IRB Infrastructure Developers Ltd, IL&FS Transportation Networks India Ltd, MEP Infrastructure Developers Ltd and Sterlite Technologies Ltd have expressed their intention to consider InvITs as a way to unlock capital.

“This was the last major step that was awaited. Till now, they were more talking about the regulation and its impact. The latest notification talks about how the procedure will work in terms of a public offer for these products,” said Arka Mookerjee, partner at corporate law firm J Sagar Associates, adding that no major clarifications on InvITs are now expected from the regulator.Sebi said InvITs can offer up to 75% units to institutional investors in the public issue and the rest to any other class of investors.

Out of the institutional investors’ quota, the issuing InvIT may allocate as much as 60% to anchor investors.Anchor investors, such as mutual funds, insurance firms and pension funds can come in as strategic investors in the public issue of an InvIT if it applies for buying units worth at least Rs.10 crore, Sebi said.

In the public issue, Sebi said, the allocation to anchor investors will be done on a discretionary basis subject to the minimum of two investors for allocation up to Rs.250 crore.For allocation of more than Rs.250 crore, a minimum of five anchor investors will be needed.

A public issue by an InvIT can be kept open for at least three working days and up to 30 days, Sebi added.Merchant bankers expect companies to finalize their InvIT plans soon, adding infrastructure developers are keen to raise funds through this route to re-capitalize their businesses.

“This should expedite listing of InvITs, an area (where) we are seeing a fair bit of activity on the ground. With the listing guidelines coming out, one should be see the first draft document filing soon,” said Pranjal Srivastava, head, equity capital markets at ICICI Securities Ltd.According to Srivastava, the product should be able to generate interest among the various classes of investors.

“On an overall basis, the product is attractive; so, there should be demand from investors. We expect demand from yield-oriented investors and hybrid investors with foreign institutional investors anchoring the demand,” he said, adding that domestic institutional and high net worth individual investors will also be interested.Though Sebi allowed the launch of InvITs in 2014, no firm has launched any InvIT in the country yet.In August 2015, Sebi had proposed to ease norms for InvITs and reduced the minimum commitment amount required by sponsors in InvITs from 25% to 10%. In other words, the company that promotes a trust can hold as little as 10% of the units issued by the trust.

In 2014, while allowing the launch of InvITs, the market watchdog had said an initial offer will not be mandatory for InvITs though eventual listing will be mandatory for both publicly and privately placed InvITs.InvITs are allowed to invest in infrastructure projects, either directly or through a special purpose vehicle (SPV).

In case of public-private-partnership (PPP) projects, such investments will be only through an SPV, as per the current norms.Sebi’s norms say any InvIT that looks to invest at least 80% of its assets in completed and revenue generating infrastructure assets, has to raise funds only through a public issue of units, with a minimum 25% public float and at least 20 investors. Also, the minimum subscription size and trading lot of a listed InvIT has to be Rs.10 lakh and Rs.5 lakh, respectively.While infrastructure companies are keen to utilize the InVIT route, experts said that the product may According to Sandeep Parekh, founder, Finsec Law Advisors, since the dynamics of InvITs are new to investors and infrastructure is still a volatile sector in India, the initial response may be lukewarm.“The bankers concerned will need to do a lot of campaigning and road shows to ensure decent subscriptions to the listing issues. Issuing companies, too, are likely to begin with moderately large issues initially,” Parekh added.