SEBI Streamlines InvIT Conversion from Private to Public

Posted On - 27 September, 2025 • By - King Stubb & Kasiva

On August 8, 2025, the Securities and Exchange Board of India (SEBI) issued a significant circular on converting private listed InvITs into public InvITs (SEBI/HO/DDHS/DDHS-PoD-2/P/CIR/2025/114).[1]

Understanding InvITs:

Infrastructure Investment Trusts (“InvITs”) are investment vehicles designed to collect funds from investors to own, operate, and manage infrastructure assets, including highways, power plants, pipelines, and telecom towers. InvITs can either be private listed InvITs, traded on stock exchanges for institutional or high-net-worth investors, or public InvITs that are conceptually public. Converting a private listed InvIT to a public InvIT entails issuing units to the public, which gives the units liquidity and accessibility. The new SEBI circular updates the rules around converting a private listed InvIT to a public InvIT as outlined in the Master Circular for InvITs dated May 15, 2024.

Reason for Update

The changes were made after consultation with the market participants considered and consultation with the Hybrid Securities Advisory Committee (“HySAC”). The revised framework seeks to enhance compliance for sponsors and their sponsors’ groups, align the conversion process with the processes of follow-on public offer procedures, increase transparency and investor protection, and enhance the growth of the InvIT market in India.

Key Changes to the Framework[2]

  1. Conversion Process:
    • A Private Listed InvIT shall be converted into a Public InvIT by way of a public issue of units through fresh issue and/or offer for sale.
    • After issuance and listing, it shall be considered a Public InvIT and shall start having to follow the applicable requirements for Public InvITs.
  2. Conditions for Issuance:
    • The assets shall comply with Regulation 18(5).
    • Have complied with all applicable listing and disclosure requirements for a period of three years or since the date of listing.
    • Have not had any default in distributions of any amounts (that it owed) since the date of listing.
    • Have complied with Regulation 16(6) and 16(7).
    • The ordinary resolution shall require that 75% of value of unit holders approve the public offering.
  3. Offer for Sale Conditions:
    • Units offered shall be free from encumbrance or lock-in.
    • Only sponsor(s), related parties, and associates may make the public issue.
  4. Public Issue Process:
    • Must follow the requirements for initial offer of securities set out in the InvIT Regulations and Chapter 2 of the Master Circular.
  5. Minimum Contribution from Sponsor(s):
    • Minimum 15% of the public offering or post-offering capital.
    • If Regulation 12(3)(iii) has not been met, then a minimum 25%.
    • Locked-in, 18 months post-listing; if previously locked-in for longer than 18 months, that fact is still honoured.
  6. Transferability Restrictions:
    • Unitholding of sponsor(s) more than minimum: 1-year lock-in.
    • Unitholding of all other pre-issue: 1-year lock-in.
  7. Maximum Subscription:
    • No one (other than sponsor(s), related party, or associate) may subscribe for more than 25% of post-issue unit capital.
  8. Disclosures in the Offer Document:
    • Description of any distributions made by the InvIT.
    • Comparison of actual results achieved with projections made in the placement memorandum.

Effective Date and Applicability

This circular will take effect immediately once dated and applies to all private listed InvITs that will convert into public InvITs after this date. As such, all private listed InvITs will need to comply with the revised framework dated August 8, 2025. The circular is addressed to Bharat InvITs Association, InvITs, sponsors, investment managers, trustees, project managers, recognized stock exchanges, and registered depositories, all of whom are responsible for the dissemination of the circular, compliance, and monitoring of compliance with the amended rules in relation to InvITs.

Implications for Stakeholders

The revised framework offers advantages for InvIT managers and sponsors in that it simplifies the conversion process and is easier to comply with. It offers opportunities for strategic capital raising and enables depositories and stock exchanges to assist with compliance and monitoring of compliance, as well as with unitholding and lock-in requirements. Investors benefit from increased transparency, as example by receiving more information on investment opportunities, and even greater access to infrastructure investments and investments qualified by risk due to uniformity in the application of regulations and sponsor investor lock-in requirements.

Conclusion

SEBI’s circular represents a significant step toward making the conversion of private listed InvITs into public InvITs more efficient and investor friendly. By streamlining sponsor requirements and aligning the public offer process with follow-on offer regulations, SEBI is fostering a more transparent and accessible InvIT market. Stakeholders are advised to review the updated framework and prepare for compliance.

[1] https://www.sebi.gov.in/legal/circulars/aug-2025/review-of-framework-for-conversion-of-private-listed-invit-into-public-invit_95943.html

[2] https://www.sebi.gov.in/web/?file=https://www.sebi.gov.in/sebi_data/attachdocs/nov-2024/1731580625738.pdf#page=110&zoom=page-width,-26,791