FPI investment in REITs and InvITs

FPIs will be permitted to subscribe to listed debt securities issued by ReITs and InvITs.

Sitharaman, Budget Speech

SEBI (Infrastructure Investment Trusts) Regulations 2014 lays down the framework for the regulation of Infrastructure Investment Trusts (“InvITs”) and other connected matters. These are fund vehicles that enable investors to invest in infrastructure assets without actually owning them and also aid developers to monetize revenue-generating infrastructure assets. Trustee, Investment Manager, Sponsor. Similarly, SEBI (Real Estate Investment Trusts) Regulations 2014 lays down the regulatory framework for Real Estate Investment Trusts (“REITs”). REITs facilitates fund investment in real estate, similar to InviTs.

The extant SEBI (Foreign Portfolio Investors) Regulations 2014 lays down permitted investments for FPIs. In this context, these currently include listed/unlisted non-convertible bonds issued by an Indian company in the Infrastructure sector, non-convertible debentures or bonds issued by Non-Banking Financial Companies categorized as ‘Infrastructure Finance Companies’ and even unlisted non-convertible debentures/ bonds issued by Indian company.

However, both REITs and InvITs are by nature trusts and are in that manner registered. The budget announcement paves way for ease of access to FPI in REITs and InvITs.

MANAL SHAH

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