In a radical change for publicly listed infrastructure investment trusts (InvITs) and real estate investment trusts (REITS), the board of Securities and Exchange Board of India on Tuesday reduced the minimum subscription size to a range of ₹10,000-15,000 and revised the trading lot down to one unit.
Currently, while making an initial public offer and follow-on offer, minimum subscription should not be less than ₹1 lakh for InvITs and ₹50,000 for REITs.
Fillip to listed players
“This change has democratised this market and with three publicly listed InvITs and three publicly listed REITs, everyone who wants to have an income which is better than fixed deposit income and with reasonable risk (albeit higher than fixed deposit) can now enter this market,” said Yash Ashar, Partner & Head - Capital Markets at Cyril Amarchand Mangaldas.
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“This is a welcome amendment and will provide a massive fillip to publicly listed InvITs and REITs. Thank you SEBI for providing a relatively safe retirement investment option for this country,” added Yash Ashar.
The move will benefit listed instruments including Embassy Office Parks REIT, Mindspace Business Parks REIT and IndiGrid Trust InvIT.
Vinod Rohira, CEO, Mindspace Business Parks REIT, said: “We welcome SEBI’s regulation to reduce the minimum application value from ₹50,000 to ₹10,000-15,000, and trading lot to one unit. The earlier ₹50,000 cap restricted participation to only a certain set of investors. We believe that this amendment makes investment in REITs at par with other equity options in India. Reduction in minimum application amount will further bring in more investors, thus improving the liquidity in REITs.”
Unlisted InvITs
In case of unlisted InvITs, SEBI has proposed to amend the regulations for such instruments and ensure that there need to be a minimum of five investors (excluding sponsors and associate entities) holding 25 per cent or more of the total unit capital of the InvIT.
“This change will have an impact on some proposed InvITs which were meant to be platforms for on-boarding assets with few or no investors. There are arguments on both sides on whether this is a necessary change or not,” Ashar said.
No pvt placement to QIBs
SEBI has also excluded unlisted InvITs and REITS from undertaking the issuance of debt to Qualified Institutional Buyers, on a private placement basis and on the Electronic Debt Bidding platform.
SEBI, at its board meeting, indicated that it has allowed all issuers (including those less than three years in existence) to issue such debt. But the exclusion of unlisted InvITs and REITs could have implications on these trust vehicles as their avenues of financing and leverage would reduce substantially.
With three successful REIT listings and the newly amended minimum subscription limit, more retail investors will be attracted to these instruments. This, in turn, will lay the ground for overall performance improvements and more listings on the fertile Indian marketplace in the future, said Anuj Puri, Chairman at Anarock Property Consultants.