The minimum subscription to be received in the rights issue should be 90% of the issue size through the letter of offer.
The Securities and Exchange Board of India (Sebi) on Friday announced guidelines pertaining to rights issue of units by listed real estate investment trusts (REITs) and infrastructure investment trusts (InvITs).
In November last year, Sebi had issued directives for preferential issue and institutional placements of units by listed REITs. Sebi on Friday issued two separate guidelines – one each for REITs and InvITs.
Sebi said the issuer will have to disclose objects of the issue, related-party transactions, valuation, financial details, review of credit rating and the grievance redressal mechanism in the placement document.
With regard to pricing, Sebi said the investment manager on behalf of the REIT and InvIT, in consultation with lead merchant banker(s), will decide the issue price before determining the record date.
The minimum subscription to be received in the rights issue should be 90% of the issue size through the letter of offer. REITs, which invest primarily in completed, income-yielding real estate assets, are similar to mutual funds, and can be listed and traded on stock exchanges. There are multiple advantages of REITs for both investors as well as developers or private equity (PEs). For investors, REITs offer steady returns, capital appreciation opportunity and low ticket size of investment. For developers, it can help them monetise the portfolio of operational assets, unlock capital and deleverage the balance sheets.
Market regulator also directed that disclosures should be made regarding related party transactions and valuation report of the asset to be financed through proceeds of the issue shall be provided along with the draft letter of offer.
It said the merchant banker on behalf of the REIT or InvIT should announce the record date to stock exchanges at least three working days prior to the record date. REITs and InvITs should not withdraw its rights issue after announcement of the record date, Sebi said.