NEW DELHI: On Friday, Sebi suggested expanding the definition of ‘strategic investor’ in the REIT and InvIT regulations to include Qualified Institutional Buyers (QIBs) and specific categories of Foreign Portfolio Investors (FPIs) to attract more institutional investments.
In a consultation paper, Sebi pointed out that the existing definition is overly restrictive, excluding significant institutional investors like pension funds, provident funds, and insurance funds.
These entities are active in the REIT and InvIT sectors due to their preference for long-term, stable income-generating investments, but they are currently ineligible for classification as strategic investors.
Sebi proposed that the definition be revised to allow entities recognized as QIBs under ICDR regulations to qualify as strategic investors.
This extension includes a broader range of institutions, such as public financial institutions and specific pension and provident funds, including those managed by the armed forces or postal services.
Moreover, Sebi highlighted that certain FPIs, including individuals, corporate bodies, or family offices, do not qualify as QIBs under current ICDR regulations.
The regulator suggested that the approach for classifying FPIs as strategic investors could also be expanded.
Sebi specified that strategic investors must commit to investing at least 5% of the total offer size and can invest up to 25% in a REIT or InvIT issue, entering into binding unit subscription agreements prior to the public issue launch.
These investments will have a lock-in period of 180 days post-listing, according to the draft circular.
The Securities and Exchange Board of India (Sebi) welcomes public feedback until August 22.
