NEW DELHI: The Securities and Exchange Board of India (Sebi) has expanded the definition of “strategic investor” for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs), aiming to enhance investor participation in their public offerings.
This revised criteria will facilitate capital attraction for these trusts, promote flexibility, and overall ease of business operations.
Sebi identified that the previous definition of strategic investor was too limited, excluding significant institutional investors like pension funds, provident funds, and insurance funds.
While these entities are active in REITs and InvITs due to their interest in long-term, stable income-generating assets, they were not classified as strategic investors under the former guidelines.
In response to this issue and to foster a better business environment, Sebi has amended the strategic investor definition to allow entities recognized as Qualified Institutional Buyers (QIBs) to register as strategic investors, as per notifications issued on December 9.
This amendment includes a broader range of institutional players such as public financial institutions, pension and provident funds, alternative investment funds, state industrial development corporations, family trusts, and intermediaries with a net worth surpassing Rs 500 crore, as well as various tiers of non-banking finance companies.
The changes followed Sebi’s board approval of the proposal in September.
Additionally, in November, Sebi reclassified REITs as equity-related instruments to encourage greater participation from mutual funds and specialized investment funds (SIFs).
It confirmed that InvITs will retain their classification as hybrid instruments.
Effective January 1, 2026, any investments made by mutual funds and SIFs in REITs will be recognized as investments in equity-related instruments, as stated by the regulator.
