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SEBI revises minimum application value, trading lot for REITs and InvITs with eye on retail investors

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SEBI revises minimum application value, trading lot for REITs and InvITs with eye on retail investors

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The minimum application value has been reduced to Rs 10,000-15,000 for both REITs and InvITs.

SEBI revises minimum application value, trading lot for REITs and InvITs with eye on retail investors
The Securities and Exchange Board of India (SEBI) has reduced the minimum application value of real estate investment trusts (REITs) and infrastructure investment trusts (InvITs), and revised the trading lot to one unit for these emerging instruments to make them attractive for retail investors. The minimum application value has been reduced to a range of Rs 10,000-15,000 for both REITs and InvITs, compared to the earlier requirement of Rs 50,000 for REITs and Rs 1 lakh for InvITs, SEBI said in two separate notifications dated July 30.
Also, the market regulator said the revised trading lot will be of one unit for REITs and InvITs. Allotment to any investor is required to be made in multiples of a lot. Earlier, for initial listing, a trading lot was required to be of 100 units.
SEBI’s move will lead to better liquidity and efficient price discovery and will provide an attractive opportunity for retail investors to earn stable yields with growth potential. In addition, the regulator has introduced a minimum unit holders’ requirement for unlisted InvITs. "The minimum number of unitholders in an InvIT, other than the sponsor(s), its related parties and its associates, shall be five, together and collectively holding at least 25 percent of the total units of the InvIT, at all times," SEBI said. Explaining further, the regulator said a unit holder along with its associates and related parties will be considered as a single unit holder.
REITs and InvITs are relatively new investment instruments in the Indian context but are extremely popular in global markets. While an REIT comprises a portfolio of commercial real assets, a major portion of which is already leased out, InvITs comprise a portfolio of infrastructure assets such as highways and power transmission assets.
As of March end, a total of 15 InvITs and four REITs were registered. Of these, six InvITs and three REITs were listed on the stock exchanges. These investment vehicles collectively raised close to Rs 55,000 crore in 2020-21, taking their net assets to Rs 1.64 lakh crore. The funds were raised through the initial offer, preferential issue, institutional placement and rights issues.
In a separate notification, SEBI has permitted banks, other than scheduled banks, to act as a banker to such issues, to provide easy access to investors to participate in public/rights issues by using various payment avenues. Bankers to an issue means a scheduled bank or such other banking company, as may be specified by SEBI from time to time, carrying on activities, including acceptance of application money, acceptance of allotment or call money, refund of application money and payment of dividend or interest warrants, the regulator said.
The new rules have become effective from July 30, it added. The notifications come after the board of SEBI approved proposals in this regard in late June.
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