SEBI Fast-Track Follow-On Offer for REITs and InvITs: New Proposal

The Securities and Exchange Board of India (SEBI) has proposed a fast-track follow-on offer (FFPO) framework for real estate investment trusts (REITs) and infrastructure investment trusts (InvITs). This move aims to simplify the fundraising process, ensuring efficiency and market stability. SEBI’s initiative seeks to make capital raising faster and more transparent for these investment vehicles.

SEBI Fast-Track Follow-On Offer: Lock-In Rules for Sponsors

SEBI’s consultation paper outlines new lock-in provisions for preferential allotments. Under this proposal:

• 15% of units allotted to sponsors and their group will be locked for three years after trading approval.
• The remaining units will be locked for one year from the trading approval date.

These restrictions ensure that sponsors remain invested, preventing short-term market fluctuations. They also align sponsor interests with long-term investors, promoting stability in REITs and InvITs.

Why SEBI’s Fast-Track Follow-On Offer Matters

By introducing these measures, SEBI aims to enhance transparency, investor confidence, and governance in REITs and InvITs. The new lock-in provisions reduce speculative trading and encourage responsible investment practices.

SEBI Seeks Public Feedback on the Proposal

SEBI has invited industry stakeholders to share feedback on the framework before finalizing guidelines. Public participation will help shape regulations that benefit both investors and sponsors. Investors can review the full details on SEBI’s website.

Impact on REIT and InvIT Investors

With these new regulations, REITs and InvITs will become more stable investment options. The improved fundraising process will benefit retail and institutional investors, offering them better exposure to real estate and infrastructure assets. More efficient capital infusion will also support the expansion of these sectors.

Strengthening India’s Capital Markets

This fast-track follow-on offer proposal is part of SEBI’s broader strategy to support India’s financial markets. By increasing liquidity and ensuring long-term commitments, SEBI is making REITs and InvITs more reliable investment avenues. Additionally, improved regulatory frameworks will help attract foreign investments, boosting India’s economic growth.