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CS Professional · Strategic Management and Corporate Finance · Infrastructure Investment Trusts

A public InvIT has 40,00,000 units outstanding after its initial offer. Of these, the sponsor group holds 28,00,000 units and the balance is held by public investors. Which comment is correct about compliance with the minimum public holding of 25%?

The InvIT complies, since public holding is 12,00,000 of 40,00,000 units, which is 30% and above the 25% minimum. The sponsor group holds the remaining 70%. A claim of 20% or 10% results from calculation errors.

  1. AIt complies because the public holds 30%Correct
  2. BIt does not comply because the public holds only 20%
  3. CIt complies because the sponsor holds more than 51%
  4. DIt does not comply because the public holds 12,00,000 units, which is below 10%

Explanation

Public units = 40,00,000 - 28,00,000 = 12,00,000. Public percentage = 12,00,000 / 40,00,000 = 30%, which is above 25%. Check: sponsor 28/40 = 70%, and 70% + 30% = 100%. The 20% option wrongly uses another base.

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