Relaxed FPI norms in InvITs to help Reliance, Tata Power cut debt

Mumbai, Jul 8: The infrastructure InvITs to be launched by Reliance Industries, Tata Power and Vodafone Idea will be able to attract investments from foreign portfolio investor (FPIs), with the Union Budget relaxing norms to enable FPIs to subscribe to listed debt securities issued by the InvITs and REITs.
While Sebi had operationalised issue of debt securities under the InvIT and REIT regulations, raising financing from FPIs had hit a roadblock due to restrictions under the FPI regulations as only corporate debentures were permitted.
“As Invits and REITs are organised as trusts, it is now proposed to align the FPI regulations and permit FPIs to subscribe to debt securities issued by Invit and REITs,” said Shagoofa Rashid Khan, Partner, Cyril Amarchand Mangaldas.
Reliance Jio Infocomm, a subsidiary of Reliance Industries, plans to hive off its telecom and fibre assets to two separate InvITs. With this, Reliance will be able to park debt worth $15.4 billion with the InvIT which is seeking investments from both foreign and local investors.
Taking a leaf from RIL’s books, Tata Power also plans to deleverage its balance sheet by hiving off its renewable energy portfolio and park debt worth Rs 10,000 crore with the InvIT. Tata Power had gross debt of Rs 48,500 crore as on March 2019. Vodafone Idea, owned by Vodafone and Aditya Birla group, is also planning an InvIT to hive off part of its Rs 1.2 trillion debt.