If I utter the word REITs, I will be accused of conflict of interest: Sebi Chairperson Buch

“… If I utter the word REITs, I am accused of a conflict of interest. So perhaps it would be better for me to abstain,” Buch said while referring to a slide of her presentation during her speech at the CII Financing 3.0 summit on Monday.

This was the second public appearance of Buch since Hindenburg Research’s allegations in August. Later, when asked about Congress spokesperson Pawan Khera’s allegations against her of drawing salary while being the on the board of Sebi, Buch did not respond. Khera has claimed that the Sebi Chairperson continued to draw salary from ICICI since 2017, when she joined Sebi as a whole-time member (WTM), and then took over at the helm of the market regulator.

Hindenburg had claimed that during Dhaval Buch’s time as an advisor to Blackstone, Sebi came out with 7 consultation papers on REIT, 3 consolidated updates, 2 new regulatory frameworks and nomination rights for units, specifically benefiting private equity firms like Blackstone.

“During Dhaval Buch’s time as senior advisor, while his wife was a Sebi official, Blackstone sponsored Mindspace and Nexus Select Trust, India’s second and fourth REIT to receive Sebi approval to publicly IPO,” the US-based short-seller had said.

Buch and her husband have denied these allegations and said that over the last two years, Sebi has issued more than 300 circulars (including “Ease of Doing Business” initiatives in line with the developmental mandate of Sebi) across the entire market eco-system.

“All regulations of Sebi are approved by its Board (and not by its Chairperson) after extensive public consultation. Insinuations that a handful of these matters related to the REIT industry were favours to any specific party are malicious and motivated,” Sebi Chairperson and her husband had said in a joint statement last month.

Hindenburg had alleged that Blackstone has been one of the largest investors and sponsors of REITs, a nascent asset class in India. India’s first ever REIT, Embassy, obtained Sebi approval and launched an IPO on April 1, 2019, sponsored by Blackstone, just 3 months before Dhaval Buch reported joining Blackstone in July 2019. Nearly 13 months later, in August 2020, Mindspace REIT, backed by Blackstone, became India’s second REIT to IPO, after SEBI approval.

“Blackstone now sponsors Nexus Select Trust, described as India’s largest retail platform of assets, by ICICI Research, which listed in May, 2023 and became India’s fourth publicly traded REIT. Blackstone has multiple other interests across retail estate,” Hindenburg had said.

A REIT raises funds by issuing units to investors and invests those funds primarily in assets in the real estate sector. The investment in such assets can be made directly or through a special purpose vehicle (SPV)/holding Company. The investors who hold units in a REIT are called unit holders. The income generated from the underlying assets of the REIT are regularly distributed to the unit holders.

At the CII event, the Sebi Chairperson said soon the country will have a systematic investment plan (SIP) instalment amount starting at Rs 250 per month. Currently, the minimum SIP instalment amount is Rs 500 per month.

“We are well on our way to making a Rs 250 (per month) SIP a reality in our country,” she said.

Sebi has been working very closely with the mutual fund industry to make the smaller amount of SIP viable and get traction, Buch said.