NEW DELHI: Sebi on Friday proposed to broaden the definition of ‘strategic investor’ under the REIT and InvIT norms by including QIBs and certain categories of FPIs to attract more institutional capital.
In a consultation paper, Sebi noted that the current definition of strategic investor under the REIT (Real estate investment trusts) and InvIT (Infrastructure investment trusts) framework is narrow and excludes several large institutional investors, such as pension funds, provident funds, and insurance funds.
These entities, though active participants in REITs and InvITs due to their preference for long-term and stable income-generating assets, are not eligible to be categorised as strategic investors at present.
To address this gap and promote ease of doing business, Sebi said, “It is proposed to amend the definition of strategic investor to provide that an entity that is considered a QIB (Qualified Institutional Buyer) under the ICDR regulations may apply as a strategic investor”.
This includes a wider pool of institutions such as public financial institutions, pension and provident funds with minimum corpus, and insurance funds managed by the armed forces or the postal department, among others.
Further, Sebi noted that foreign portfolio investors (FPIs) who are individuals, corporate bodies or family offices are not QIBs under the ICDR rules.
“The same approach can be considered for FPIs for inclusion under strategic investor in the REIT and the InvIT regulations.
“…it is proposed that FPIs who are individuals, corporate bodies or family offices shall not be considered under the strategic investor category,” the regulator said.
Sebi also stated that strategic investors are required to invest at least 5 per cent of the total offer size and can invest up to 25 per cent of the total offer size in a REIT or InvIT issue and enter into binding unit subscription agreements before the opening of the public issue.
Their investments are subject to a lock-in period of 180 days post-listing, as per the draft circular.
The Securities and Exchange Board of India (Sebi) has invited public comments till August 22.