SEBI has permitted Infrastructure Investment Trusts (InvITs) to include debt-funded road maintenance expenses in their Net Distributable Cash Flows (NDCF), contingent upon certain conditions. This ruling aims to provide clearer guidelines and improve operational flexibility for InvITs.
Debt-Funded Expenses Allowed in InvIT NDCF
The Securities and Exchange Board of India (SEBI) has released a new directive allowing Infrastructure Investment Trusts (InvITs) to factor in debt-funded major maintenance expenses of road assets while calculating their Net Distributable Cash Flows (NDCF). This decision aims to streamline the operational guidelines for InvITs and enhance their financial stability.
Under the new framework, InvITs must secure unitholder approval, external audit certification, and provide full disclosures to stakeholders before including such expenses in their NDCF. These provisions signal SEBI's commitment to maintaining investor confidence and ensuring informed decision-making.
Practitioners advising on InvIT structures should be aware of the specific compliance measures that accompany this ruling. Ensuring proper documentation and adherence to the new requirements will be critical for InvITs seeking to enhance their cash flow projections and operational viability.
Citations
- SEBI Regulation (2026) 5 SEBI LR 300
