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

Under the SEBI InvIT Regulations, at least what percentage of the net distributable cash flows of the underlying SPV must be distributed to the InvIT, and at least what percentage of the InvIT's net distributable cash flows must be distributed to unitholders?

Both tiers carry a 90% minimum: the SPV must distribute at least 90% of its net distributable cash flows to the InvIT, and the InvIT must distribute at least 90% of its net distributable cash flows to unitholders. Lower figures such as 80% do not satisfy the regulations.

  1. A90% of SPV cash flows to InvIT; 90% of InvIT cash flows to unitholdersCorrect
  2. B90% of SPV cash flows to InvIT; 80% of InvIT cash flows to unitholders
  3. C80% of SPV cash flows to InvIT; 90% of InvIT cash flows to unitholders
  4. D80% of SPV cash flows to InvIT; 80% of InvIT cash flows to unitholders

Explanation

The regulations require not less than 90% of the net distributable cash flows of the SPV to be distributed to the InvIT (subject to the Companies Act for SPVs) and not less than 90% of the InvIT's net distributable cash flows to be distributed to unitholders. The 80% figures are lower than the legal minimum.

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