Sebi issues consultation paper for public issue of REITs

The allocation in the public issue to is proposed to be capped at 75%

The Securities and Exchange Board of India following the guidelines for public issue of Infrastructure Investment Trusts on Thursday issued similar guidelines for the Real Estate Investment Trusts.      

In the consultation paper Sebi has proposed that disclosures in the offer documents and draft papers be kept in the public domain for at least 21 days.

The allocation in the public issue to qualified institutional buyers (QIBs) is proposed to be capped at 75 per cent. An investment manager can allocate up to 60 per cent of the portion available for allocation to QIBs to anchor investors.

“An anchor investor shall make an application of a value of at least Rs. 10 crore in the public issue… allocation to anchor investors shall be on a discretionary basis and subject to the minimum of 2 investors for allocation upto Rs. 250 crore and 5 such investors for allocation more than Rs. 250 crore,” said Sebi in the consultation paper.

Sebi also proposed no REITs make a public issue of units if it or any of its sponsors, investment manager or trustee was barred from accessing the capital market by it or is a wilful defaulter as defined by the Reserve Bank.

Sebi had cleared the regulations for REITs in 2014 but so far none of the real estate players have floated a REIT due to lack of clarity on taxation.

Sebi on the consultation paper for public issue of this infrastructure funding instrument has invited comments from the market till the 16th of January.

Sebi has also proposed that if changes are made in the draft offer document with respect to change in sponsor, change in more than half of the board of directors of the manager, change in any object that amounting to more than 20 per cent of the issue size, increase or decrease in estimated issue size by more than 25 per cent then the lead merchant banker would need to file fresh draft offer document.

The issue would need to be kept open for at least three working days but not more than 30 days.

In the consultation paper Sebi has proposed that disclosures in the offer documents and draft papers be kept in the public domain for at least 21 days.

The allocation in the public issue to qualified institutional buyers (QIBs) is proposed to be capped at 75 per cent. An investment manager can allocate up to 60 per cent of the portion available for allocation to QIBs to anchor investors.

“An anchor investor shall make an application of a value of at least Rs. 10 crore in the public issue… allocation to anchor investors shall be on a discretionary basis and subject to the minimum of 2 investors for allocation upto Rs. 250 crore and 5 such investors for allocation more than Rs. 250 crore,” said Sebi in the consultation paper.

Sebi also proposed no REITs make a public issue of units if it or any of its sponsors, investment manager or trustee was barred from accessing the capital market by it or is a wilful defaulter as defined by the Reserve Bank.

Sebi had cleared the regulations for REITs in 2014 but so far none of the real estate players have floated a REIT due to lack of clarity on taxation.

Sebi on the consultation paper for public issue of this infrastructure funding instrument has invited comments from the market till the 16th of January.

Sebi has also proposed that if changes are made in the draft offer document with respect to change in sponsor, change in more than half of the board of directors of the manager, change in any object that amounting to more than 20 per cent of the issue size, increase or decrease in estimated issue size by more than 25 per cent then the lead merchant banker would need to file fresh draft offer document.

The issue would need to be kept open for at least three working days but not more than 30 days.