The Securities and Exchange Board of India (Sebi) has taken a series of policy measures to attract more participation into Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs). Chairman Ajay Tyagi on Wednesday said, “There is a clear visibility of a strong pipeline of infrastructure and real estate assets to be monetized through InvITs and REITs in near future.”
He was speaking at the Ficci’s annual capital market conference.
Infrastructure and real estate are the two sectors that have tremendous spillover effects on the rest of the economy. REITs and InvITs are vehicles which enable monetisation of existing assets, and have shown significant growth over the last three years. The total unit capital of all REITs and InvITs put together stands at more than Rs 58,000 crore at present.
Measures such as reducing the trading lot, facilitating further fund-raising through preferential issue, including easier placement to institutional investors, rights issue and enabling monetisation though pledging of units have been taken by Sebi.
However, market participants believe that allowing foreign portfolio investors (FPIs) to invest in debt securities issued by REITs and InvITs will further improve the liquidity in the market. They feel that allowing FPIs to invest in debt securities will improve investor confidence and create more liquidity.
Shagoofa Rashid Khan, partner & head-Funds, investment & advisory at Cyril Amarchand Mangaldas, said, “While InvITs/REITs regulations permit fund-raising through NCD issuances, FPI regulations are yet to be amended to include such NCDs as eligible instruments for FPIs. Such an amendment will broad-base fund-raising options for InvITs/REITs and give them access to debt on competitive terms as well as widen the institutional participation on the debt financing side, and overall, provide risk-adjusted returns to the investors.”