Sebi lays guidelines on preferential issues for listed REIT, InvIT

Capital markets regulator Sebi on Wednesday came out with guidelines pertaining to preferential issues and institutional placement of units by emerging investment vehicles -- REIT and InvIT.

The regulator has specified the manner of issuance of units under preferential issue as well as institutional placement by listed real estate investment trust (REIT) and infrastructure investment trust (InvIT), according to two separate circulars.

With regard to the issuance of units under institutional placement, Sebi said that no allotment will be made, either directly or indirectly, to any institutional investor, who is a sponsor or manager or is a person related to, or related party or associate of the sponsor or the manager.

However, the allotment of units can be made to the sponsor for unsubscribed portion in the institutional placement where at least 90 per cent of the issue size has been subscribed, the object of the issue is the acquisition of assets from that sponsor and unit-holders approval has been taken for unsubscribed portion being allotted to sponsor.

A listed InvIT and REIT may make a preferential issue of units or institutional placement of units in case units of the same class, which are proposed to be allotted have been listed on a stock exchange for a period of at least six months prior to the date of issuance of notice to its unit holders for convening the meeting to pass the resolution.

REITs and InvITs are relatively new investment instruments in the Indian context but are extremely popular in global markets.

While a REIT comprises a portfolio of commercial real assets, a major portion of which is already leased out, InvITs comprise a portfolio of infrastructure assets, such as highways and power transmission assets.