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Journalism of Courage
The board of the Securities and Exchange Board of India (Sebi) on Monday allowed hybrid instruments such as Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) to raise funds by issuing debt securities. The board of the regulator relaxed the norms for listed REITs and InvITs in order to make these instruments attractive for investors.
The Sebi board has also decided to have further consultations with the stakeholders on a proposal to allow REITs to invest at least 50 per cent stake in the underlying holding company. Similarly, it has allowed a holding company, with at least 50 per cent stake, to invest in the underlying special purpose vehicle.
According to a Sebi statement released after its board meeting, the regulator has decided to amend the definition of ‘valuer’ for both REITs and InvITs. Sebi also allowed “strategic investors” like registered scheduled commercial bank, NBFC and international multilateral financial institutions to participate in the public issues of REITs. Such investors are already allowed in InvITs.
Sebi’s board has approved amendment to REITs and InvITs regulations in order to facilitate growth of such instruments, the regulator said.
Apart from this, now a REIT would require single asset under it from the current two projects. This is on similar lines of InvIT. REITs can now also lend to the underlying holding company.
Sebi had in 2014, notified the REITs and InvITs Regulations, allowing setting up and listing of such trusts. Since then, however, only two InvITs have got listed on the stock exchanges so far and not a single REIT has been listed in the country.
