SEBI chief for bitesize REITs, InvITs to draw retail investors
SEBI will strive to bring down the minimum investment size for REITs, InvITs, and municipal bonds. This is to facilitate a diverse holding of these products across investors, said SEBI Chairperson Madhabi Puri Buch.
“The strength of our equity market comes from our retail investors. What it reflects is the fractional ownership of companies. In a similar manner, the fractional ownership of real estate and infrastructure is where the strength of the country will lie,” Buch said at the fifth SEBINISM Research Conference here.
She said the governance and regulatory aspects of these asset classes had given the regulator the comfort to go and tell retail investors that they can invest in these products. The way the InvITs were being structured, for instance, had resulted in high investor appetite, particularly among foreign investors.
GROWTH OPPORTUNITY
“We have brought down the minimum investment size of these products to make them affordable. We will bring down the ticket size even further and facilitate innovation and digitisation within this space,” Buch said.
She said the entire market capitalisation of the equity market today was roughly onetime GDP. And that the total value of the REITs, InvITs, and municipal bond ecosystem could be another onetime GDP. “That is the opportunity for growth available to us as a nation,” Buch said.
She said the inclusion of government securities in global bond indices would bring in a lot of passive investments into the country and increase the level of investor interest in corporate debt as well.
While the secondary bond market today has low liquidity with buyandhold kind of investors, the primary market is robust,
Buch said. For every 100 rupees that the corporate sector was borrowing from the banking system, ₹6870 were being borrowed from the bond market at its peak.
Buch expects bond market borrowings by corporates to stabilise at the 60 per cent mark. “This is not small, and we have only got started with retailing and facilitating a wider and easier spread of investment for the bond market,” she said.
Buch expects the bond market, especially municipal bonds, to grow at a fast clip. “We are a capitaldeficient nation, and we need foreign capital. Where there is growth, there is capital formation; where there is capital formation, there is growth,” she said.
Between 2017 and 2022, ₹3,840 crore was raised through municipal bonds, according to reports.