SEBI’s Forward-Thinking Approach: Follow-On Offer Rules for REITs and InvITs!
SEBI is thinking about adding requirements for its upcoming offerings of infrastructure investment trusts (InvITs) and real estate investment trusts (REITs) in an effort to broaden the market for developing investment vehicles. In order to give investors access to construction projects for infrastructure and real estate, two trusts have been created in India. Pool contracts, also aid in distributing risk. Describe REITs. The majority of the investments made by real estate investment trusts (REITs) are made in finished rental real estate assets. This corporation, according to Investopedia, owns, manages, or funds rental properties. Founded as a model for investment trusts. The majority of them are very liquid since they are openly traded like equities.
A collective mutual fund akin to mutual funds is what the National Stock Exchange designates as an Infrastructure Investment Trust (InvIT). This enables investors to contribute cash directly to infrastructure projects and receive a share of the profits as returns. A sponsor sets up her InvIT because it is made to be a hierarchical structure. His privately offered InvIT enables money to be invested in finished, under-development, and income-producing assets. Public InvIT, on the other hand, can primarily invest in finished, revenue-generating assets. Over the next five years, Sebi will continue to engage with REITs and InvITs through regulatory measures, including contemplating establishing guidelines for REIT follow-up offerings. Sebi believes that REITs and InvITs have the ability to shape the development of India’s infrastructure.
In its 2022–2023 annual report, Sebi stated, “InvITs.” The procedure for REITs and InvITs is being streamlined by SEBI. The Securities and Exchange Board of India (Sebi) has been working hard to improve the legal environment and streamline the procedure for these two products. The post-issue allocation and listing period has been shortened from 12 business days to 6 business days in order to simplify the public offering procedure for REITs and InvITs. The amount of time needed has been lowered for Private Placement InvIT from 30 days to 6 business days. Market liquidity has increased as a result of these actions. REITs and InvITs are yet another cutting-edge method of funding real estate and infrastructure, which might have a positive impact on India’s economic development. REIT shareholders now have exclusive rights to propose candidates for their boards of directors according to a rule that SEBI adopted last week. The idea of self-sponsored REITs has also been advanced by authorities.
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