INSUBCONTINENT EXCLUSIVE:
New Delhi: To make REITs and InvITs more attractive, markets regulator Sebi Friday came out with a new set of proposals to provide
flexibility to the issuers in terms of fund raising and increasing the access of these investment vehicles to investors.
Under the proposal,
minimum allotment and trading lot for publicly issued REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts)
will be reduced.
Besides, it has been proposed that the leverage limit for InvITs should be increased from existing 49 per cent to 70 per
cent.
Sebi had notified Real Estate Investment Trusts (REITs) Regulations in 2014, allowing setting up and listing of such trusts which are
very popular in some advanced markets
However, till date, as many as three InvITs have issued and listed their units raising about Rs 10,000 crore and one REIT is in the process
of making a public offer despite various relaxations given by the markets regulator these investment vehicles failed to attract
investors.
Accordingly, the Securities and Exchange Board of India (Sebi) has come out with consultation paper to amend regulations
pertaining to REITs and InvITs and sought comments from public till February 18 and the final norms will be put in place after taking views
of all the stakeholders.
These proposals are aimed at providing flexibility to the issuers in terms of fund raising and increasing the
access of these investment vehicles to investors
"At the time of initial/follow-on issue, the minimum application and allotment lot shall be
of 100 units and the value of one such lot shall be within the range of Rs 15,000–20,000," the proposal noted.
After initial listing, a
trading lot should also be of 100 units, it added.
Currently, in the case of a REIT issue, the minimum subscription from any investor in an
initial offer and follow-on public offer is not less than Rs 2 lakh, while the same is Rs 10 lakh in case of InvIT.
Further, the prescribed
trading lot for the purpose of trading of units of the REIT on the stock exchange is Rs 1 lakh, while the same is Rs 5 lakh for InvIT.
The
trading lot for existing publicly issued and listed units should be reduced by the stock exchange within a period of 6 months from the date
of notification of the regulations.
Further, it has been proposed that the leverage limit for InvITs should be increased from existing 49
The enhanced limit will be available specifically for acquisition of new infrastructure assets.
Such InvITs which are increasing their
leverage beyond 49 per cent will have to make additional disclosures about financial results on quarterly basis along with specific details
of debt service coverage ratios and interest service coverage ratios and quarterly valuation of assets, as per the proposal.
To enable
unlisted privately placed InvITs, Sebi has proposed a separate framework that includes the number of investors in such an InvITs should be
as determined by the issuer including the extent of investment by a single investor.
Among other proposed frameworks are the minimum
investment by an investor should not be less than Rs 1 crore; leverage should be determined by the issuer after consultation with investor
and listing of units of such InvIT on recognised stock exchanges should not to be permitted.
Existing privately placed listed InvITs may
choose to migrate to the proposed framework for private unlisted InvITs, if they obtain the approval of more than 90 per cent of their unit
holders by value and exit may be provided to dissenting unitholders, Sebi said in its proposals.
Consequently, the units of such privately
placed InvIT should get delisted from stock exchanges.
Conversely a privately placed unlisted InvIT, may choose to list its units on stock
exchanges, after complying with the requirements as applicable for a privately placed and listed InvIT, it added.
