Sebi lets realty, infra trusts issue bonds

Allows other investor classes to invest in realty trusts

In order to attract more investors towards real estate investment trusts (REIT) and infrastructure investment trusts (InvIT), the Securities and Exchange Board of India (Sebi) on Monday relaxed norms governing such institutions allowing them to raise capital by issuing debt instruments. The move, according to experts, is likely to broaden the fund raising avenues for these trusts.

“In order to facilitate growth of Infrastructure Investment Trusts (InvITs) and Real Estate investment Trust (REITs), SEBI board, has approved certain changes allowing REITs and InvITs to raise debt capital by issuing debt securities,” Sebi said in a statement after its board meeting.

While the rules and regulations governing the formation of such trusts and listing of their units were cleared in 2014, it has met with only limited success with just two infrastructure investment trusts (IRB InvIT Fund and Indiagrid Trust) getting listed on the bourses so far. The regulator has also removed restrictions on the nature of investors who can participate in REITs bringing it at par with the infrastructure investment trusts.

Sebi said strategic investors such as registered non bank finance companies (NBFCs), scheduled commercial banks and multilateral financial institutions could also subscribe to the units issued by such trusts.

Additionally, the market regulator has also relaxed the criteria that requires a REIT to hold atleast two projects directly or through its holding company. From now, single asset REITs can also issue securities and get listed on the domestic bourses.

The capital markets regulator also said that it would hold further consultation with stakeholders on a proposal to allow Real Estate investment Trust to invest at least 50 per cent of the equity share capital or interest in the underlying holding company or the special purpose vehicle. “Allowing REITs and InvITs to raise funds through debt securities is expected to broaden the fund raising market and eventually boost investor returns,” said Bhairav Dalal, partner at PWC India, in a statement.