How Sebi's New Framework Accelerates Fundraising for REITs & InvITs?

Sebi has introduced a groundbreaking framework aimed at simplifying and expediting the fundraising process for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).

This strategic move promises enhanced liquidity, greater investor confidence, and closer alignment with global financial market standards.

Easier Fundraising

Sebi introduces a fast-track mechanism for follow-on public offers (FPOs). Simplifies the regulatory approval and filing processes significantly. Ensures quicker access to capital for critical real estate and infrastructure projects.

Enhanced Liquidity & Market Confidence

New framework mandates a minimum 25% public holding post-FPO. Boosts liquidity and ensures robust market depth. Strengthens investor confidence by aligning Indian practices with global standards.

Sponsor Lock-in Provisions Rationalized

15% of units allotted to sponsors through preferential issues locked-in for three years.

Remaining sponsor units locked in for one year.

Permits intra-sponsor group transfers, providing flexibility alongside regulatory compliance.

Efficient Regulatory Process

Streamlined process for securing in-principle approvals from all listed stock exchanges. Requires submission of draft documents along with due diligence certificates from merchant bankers. Designates one exchange as the primary platform for easier management of the FPO.

Impact on REITs

Offers REITs an alternative avenue to raise growth capital.

Deepens market participation and investment attractiveness of India's real estate sector.

Impact on InvITs

Supports critical timely funding in infrastructure projects. Widens investor base, enhancing scalability and liquidity for trusts like NDR InvIT.

Industry Perspectives

Alok Aggarwal, Chairman, Indian REITs Association (IRA): Described the framework as progressive and beneficial for capital access and market efficiency.

Sandeep Jain, CFO, NDR InvIT Managers: Highlighted improved capital access and flexible yet aligned sponsor lock-in as pivotal enhancements.

Key Facts & Figures

• Lock-in Period: 15% sponsor units (3 years), Remaining units (1 year)

• Minimum Public Holding: 25% post-FPO

• Approval: Required from all stock exchanges, with one primary exchange

• Compliance: Merchant bankers' due diligence certification mandatory