Working through regulatory uncertainties was vital to pulling off the maiden issue by an infrastructure investment trust. Rebecca Abraham reports

On 5 May IRB InvIT Fund became the first infrastructure investment trust (InvIT) to raise funds through a public issue in India. The fresh issue and offer for sale together mopped up ₹50.35 billion (US$785 million) and was subscribed 8.57 times.

IRB Infrastructure Developers – a listed company that develops roads on a build-operate-transfer basis – is the sponsor of IRB InvIT Fund. Virendra Mhaiskar, chairman and managing director of IRB Infrastructure, told newspapers that the issue’s success was “indicative of the trust and confidence” shown by investors.

The InvIT is to acquire from IRB Infrastructure six special purpose vehicles that own, operate and maintain six existing toll roads. An investment manager, which is a subsidiary of IRB Infrastructure, will oversee maintenance and operations by the six special purpose vehicles for the InvIT, generate returns for investors, and increase its assets.

The toll roads are operated and maintained under concessions granted by the National Highways Authority of India (NHAI).

Seeking clarity

For the lawyers and merchant bankers working behind the scenes on the transaction, the issue was the culmination of an evolving process on account of the regulatory uncertainty that prevailed regarding InvITs. As such, it involved constant dialogue with India’s capital markets regulator, the Securities and Exchange Board of India (SEBI).

The notification of the SEBI (Infrastructure Investment Trusts) Regulations, 2014, had set the ball rolling for establishing business trusts specifically for the infrastructure sector. However, the nascent regulations were not yet conducive to the setting up of InvITs. Several regulations needed to be tweaked before InvITs could become a reality.

Shaswata Dutta, Principal Associate, J Sagar Associates

“The whole process itself was based on trial and error… the law was very unclear,” says Shaswata Dutta, a principal associate at J Sagar Associates, which advised IRB Infrastructure on the registration of the InvIT and the subsequent public issue.

Dutta says the process began with the team giving the client a list of laws that would need to be changed if an InvIT that could draw in investors was to be set up. “At each stage we had to interact with the company to understand which law had to change,” he says.

S&R Associates was the Indian legal counsel to the underwriters, and Clifford Chance was their international counsel.

Shashwat Tewary, Senior Associate, Clifford Chance

“We provided input on how the rules compared with jurisdictions such as Singapore, where these structures have been in existence for much longer and where there is a much larger body of such transactions,” says Shashwat Tewary, a senior associate at Clifford Chance.

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Legal advisers

IRB InvIT Fund

Counsel on Indian law: J Sagar Associates with joint managing partner Dina Wadia, partner Arka Mookerjee, principal associate Shaswata Dutta, senior associate Swapneil Akut, and associates Viraj Bathe, Harshad Vaswani and Stuti Shah in Mumbai.


Counsel on Indian law: S&R Associates team with partners Sandip Bhagat and Jabarati Chandra and associates Pratichi Mishra and Henna Kapadia, and Misha Chandna.

Counsel on international law: Clifford Chance with partners Rahul Guptan and Johannes Juette and senior associate Shashwat Tewary in Singapore, and partner Owen Lysak in London.