SEBI’s new regime for InvIT SPVs once concession agreements conclude
On May 15, 2026, the Securities and Exchange Board of India introduced an important clarification on the regulatory treatment of Special Purpose Vehicles (SPVs) held by Infrastructure Investment Trusts (InvITs) once their underlying concession agreements or similar arrangements come to an end. The clarification flows from the amendment to Regulation 2(1)(zy)(ii) of the SEBI (Infrastructure Investment Trusts) Regulations, 2014 (InvIT Regulations) notified on April 17, 2026.
Under the amended framework, the mere expiry or termination of a concession agreement does not automatically strip an SPV of its classification as an SPV. Instead, the SPV can continue to be treated as an SPV, provided that specific post-concession conditions prescribed by SEBI are met.
This circular, bearing reference SEBI/HO/DDHS/DDHS-PoD-2/I/11698/2026, sets out a clear roadmap for Investment Managers of InvITs on:
- How long they may continue to hold such SPVs after project handback or termination;
- When and how they must exit these SPVs, or repurpose them for new infrastructure projects; and
- What detailed disclosures are required at both InvIT and SPV level until exit or acquisition of a new project is completed.
Regulatory background: Amendment to definition of SPV under InvIT Regulations
Change introduced in Regulation 2(1)(zy)(ii)
The trigger for this circular is the insertion of a proviso to Regulation 2(1)(zy)(ii) of the InvIT Regulations on April 17, 2026. The proviso reads as follows:
“Provided that, in respect of an SPV holding an infrastructure project, the conclusion or termination of the concession agreement or such other agreement of a similar nature shall not affect its status as an SPV and such an SPV shall continue to be classified as an SPV subject to the fulfillment of such conditions as may be specified by the Board”
In essence, SEBI has de-linked SPV classification from the continuing existence of a concession agreement, subject to compliance with further conditions that SEBI may prescribe. The May 15, 2026 circular specifies those conditions.
Objective behind the clarification
The clarification aims to:
- Avoid regulatory uncertainty when concession agreements naturally expire or are terminated;
- Allow InvITs a structured and time-bound transition for SPVs whose original project has been handed back or has ceased;
- Ensure that unit holders receive full and transparent information regarding the residual assets, liabilities and risks in such SPVs; and
- Provide flexibility for InvITs either to exit such SPVs or to utilise them for new eligible infrastructure projects, while maintaining robust governance and disclosure standards.
Mandatory actions for Investment Managers post-concession
One-year window for exit or new project acquisition
SEBI has laid down a strict timeline within which the Investment Manager must take decisive action once the relevant concession agreement or similar arrangement has ended. The Investment Manager must choose one of the following two broad courses:
- Exit the SPV, or
- Use the SPV to acquire a fresh infrastructure project.
Exit options specified by SEBI
To exit the SPV, the Investment Manager may adopt any of the following mechanisms:
- Sale of the SPV (equity or business transfer, as applicable);
- Liquidation of the SPV;
- Winding-up of the SPV; or
- Merger of the SPV with another entity.
These options provide flexibility while ensuring that passive, indefinite holding of a non-operational SPV is not permitted.
Alternative: Acquisition of a new infrastructure project
Instead of exiting, the Investment Manager may opt to retain the SPV structure and redeploy it by causing the SPV to acquire a new qualifying infrastructure project. This enables InvITs to optimise existing SPV platforms and their established banking, contractual and compliance ecosystem, subject to regulatory timelines.