The Securities and Exchange Board of India (SEBI) issued a circular, dated February 8, 2024 (the Circular), introducing revisions to the pricing methodology for institutional placements of privately placed Infrastructure Investment Trusts (InvITs).
Regulation 14(4) of the SEBI (Infrastructure Investment Trusts) Regulations, 2014 (InvIT Regulations), provides that any subsequent issue of units by an InvIT after the initial public offer may be by way of institutional placement, among other mechanisms. Paragraph 7.9 under Chapter 7 (Guidelines for preferential issue and institutional placement of units by listed InvITs) of the SEBI Master Circular for InvITs, dated July 6, 2023 (the Master Circular), outlines the pricing guidelines for institutional placements of InvITs.
Earlier, the pricing methodology for institutional placements by InvITs relied on calculating the average of the weekly high and low of the closing prices of the units on the stock exchange during the two weeks leading up to the relevant date.
Based on industry feedback and recommendations from the Hybrid Securities Advisory Committee (HySAC), SEBI has reviewed and revised the pricing methodology for institutional placements of privately placed InvITs. The floor price for institutional placement for privately placed InvITs shall be Net Asset Value (NAV) per unit of such InvIT (determined through a comprehensive valuation of all current InvIT assets undertaken in accordance with InvIT Regulations).
That said, the institutional placement by public InvITs shall be made at a price not less than the average of the weekly high and low of the closing prices of the units of the same class quoted on the stock exchange during the two weeks preceding the relevant date.