Sebi issues framework for fast-track follow-on offer by REITs, InvITs

Markets regulator Sebi on Friday came out with a framework for undertaking fast-track follow-on offers by REITs and InvITs to make fundraising more efficient.

Additionally, the regulator has prescribed a lock-in provision of three years for the preferential issue of units of REITs (real estate investment trusts) and InVITs (infrastructure investment trusts) allotted to sponsors.

In its circulars, Sebi said 15 per cent of the units allotted to sponsors and sponsor groups will be locked in for a period of three years from the date of trading approval granted for the units.

Further, the remaining units allotted to them will be locked in for one year from the date of trading approval granted for the units.

Besides, Sebi has clarified on inter se transfer of units among the sponsor or sponsor group entities within a REIT or InvIT.

With regards to the follow-on offer, Sebi said the FPO is one of the mechanisms for raising funds subsequent to the issue of units after the initial public offering.

The provisions cover aspects such as listing approvals, filing offer documents, and minimum public unit holding.

REITs and InvITs making an FPO need to ensure that they write an application to all stock exchanges on which their units are listed, and seek in-principle approval for listing their units on such exchanges. They need to choose one of them as the designated stock exchange.

"InvIT/REIT desirous of issuing units by way of follow-on offer shall, for any such issue, ensure that it has made an application to all stock exchanges on which its units are listed, to seek an in-principle approval for listing of its units on such stock exchanges and has chosen one of them as the designated stock exchanges. The units shall be issued mandatorily in dematerialised form," Sebi said in circulars.

The manager and the merchant bankers would be responsible for obtaining in-principle approval and final listing and trading approvals from the stock exchanges.

The minimum public unit holding would be at least 25 per cent of the total outstanding units of the REIT/InvITs on a post-issue basis.

The follow-on offer document, after incorporating Sebi's observations, will be filed with the regulator and recognised stock exchanges. The merchant banker would, along with the filing of the draft follow-on offer document, furnish a due-diligence certificate to Sebi.

These new rules take effect immediately, Sebi said.