INSUBCONTINENT EXCLUSIVE:
NEW DELHI: Sebi has proposed a new set of framework for REITs and InvITs in order 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 will be increased from existing 49 per cent to 70 per cent
Sebi had notified 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
Despite various relaxations given by the markets regulator, these investment vehicles have failed to attract investors
Accordingly, the Securities and Exchange Board of India (Sebi) has come out with fresh consultation paper to amend regulations pertaining
to REITs and InvITs and sought comments from public till February 18
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
"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
The trading lot for existing publicly issued and listed units should be reduced by the stock exchange within a period of six 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 per cent to 70 per cent
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 that the number of investors in such
InvITs should be as determined by the issuer including the extent of investment by a single investor
Among other proposals 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 InvITs on recognised stock exchanges should not 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 unitholders by value and exit may be provided to dissenting unitholders, Sebi said
Consequently, the units of such privately placed InvITs 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.
