The market regulatory body took the call in order to deepen the market for Real Estate Investment Trusts and Infrastructure Investment Trusts
New Delhi: To deepen the market for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs), SEBI on Tuesday decided to reduce the minimum subscription amount and trading lot size for such publicly issued emerging investment vehicles.
The minimum application value will be in the range of Rs 10,000-15,000 and trading lot will be of one unit for REITs and InvITs, SEBI said in a release after its board meeting on Tuesday.
In addition, the regulator has decided to introduce minimum unit holders requirement for unlisted InvITs. "The minimum number of unit holders, other than sponsor, its related parties and its associates shall be five together holding not less than 25 pecent of the total unit capital of the InvIT," SEBI said.
SEBI board has approved amendments to REITs and InvITs Regulations for revision in minimum subscription amount and trading lot. "The revised minimum application value shall be within the range of INR 10,000-15,000 and the revised trading lot shall be of one unit," it added.
While making an initial public offer and follow-on offer, minimum subscription should not be less than Rs 1 lakh for InvITs and Rs 50,000 for REITs under the current rules.
Allotment to any investor is required be made in the multiples of a lot. At present, for initial listing, a trading lot should be of 100 units and during follow-on offer, each lot should consist of such number of units in its trading lot as it had at the time of initial offer.
Suraj Malik, Partner, M&A Tax and Regulatory Services, at BDO India said that reduction in application value and trading lot for REITs and InvITs will enable greater retail participation in such instruments. "The government itself is targeting several REITs/InvITs to monetise state & PSU assets and this change will enable them to attract an asset allocation from a wider market of retail investors," he said.
Harsh Shah, CEO, IndiGrid said the reduction in trading lot size to one is a landmark step by Sebi to deepen the market for InvITs in India. "This will not only lead to better liquidity and efficient price discovery, but also provides an attractive opportunity for retail investors to earn stable yields with growth potential. The move also paves the way for increased institutional participation with greater confidence on liquidity," he said.
According to him, the policy action by Sebi will pave the way for a vibrant and successful InvITs market in India for infrastructure investment. Yash Ashar, Partner & Head of Capital Markets at Cyril Amarchand Mangaldas, said that in a radical change for publicly issued InvITs and REITs, Sebi has reduced minimum subscription and trading lots.
"This change has democratised this market and with three publicly listed InvITs and three publicly listed REITs, everyone who wants to have income which is better than fixed deposit income and with reasonable risk (albeit higher than fixed deposit) can now enter this market," Ashar noted.