SEBI extends comment period on proposal for sponsors of REITs, InvITs

New Delhi:

Capital markets regulator Sebi today extended the deadline for public comments till March 15 on the proposal to increase liability for sponsors of investment vehicles – REITs and InvITs.

The regulator had on February 23 introduced an advisory document on retention of sponsors in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) and sought public comments on the same till March 8.

“It has been decided to extend the period for submission of comments till March 15, 2023,” the Securities and Exchange Board of India (Sebi) said in a public notice.

In its consultation paper, the regulator has proposed changes to the rules governing REITs and InvITs that require sponsors to own a certain percentage of units in these investment vehicles.

The changes have been proposed keeping in mind the interests of the unit holders and structural vulnerabilities due to lack of sponsor for REITs and InvITs.

The watchdog has suggested that sponsors of REITs/InvITs should hold 15 percent equity for a period of three years from the date of listing as there is no mandatory unit holding requirement after three years.

It was also proposed to oblige the sponsors to keep 5 percent of the authorized capital after 3-5 years, 3 percent after 5-10 years, 2 percent after 10-20 years and 1 percent after 20 years.

According to Sebi, as the REIT/InvIT industry is nascent and continuously evolving, investment managers need to have at least one sponsor throughout their lifetime.

REITs and InvITs are relatively new investment vehicles in the Indian context, but are very popular in global markets.

While the bulk of REITs comprise a portfolio of leased commercial real assets, InvITs comprise a portfolio of infrastructure assets such as highways and electric transmission assets.

(Except for the title, this story was not edited by NDTV staff and was published on a syndicated channel.)