More reports on: Investments

Sebi relaxes norms for real estate and infra investment trusts

24 September 2016

MUMBAI: Aiming to develop the corporate bond market to attract more foreign investments into the India, markets regulator Sebi on Friday allowed a select categories of foreign portfolio investors (FPIs) to directly trade in the debt segment of the market, bypassing brokers.

The Securities and Exchange Board of India (Sebi) has relaxed norms for real estate investment trusts (REITs) and relaxed rules for investing in the infrastructure sector through Infrastructure Investment Trusts (InvITs).

A real estate investment trust (REIT) is a novel investment mechanism being contemplated by the Securities and Exchange Board of India (Sebi). REITs and InvITs are popular investment vehicles in developed markets in the real estate sector.

Sebi board meeting on Friday approved amendments to the Infrastructure Investment Trusts (InvIT) and Real Estate Investment Trust (REIT) regulations, in order to facilitate infrastructure investments.

The amended InvIT Regulations provide for allowing InvIT to invest in two level SPV structure through holding company (Holdco), subject to sufficient shareholding in the Holdco and the underlying SPV and other safeguards.

InvIT will have right to appoint majority directors in the SPV and the Holdco will distribute 100 per cent cash flows realised from underlying SPVs and at least 90 per cent of the remaining cash flows.

The amended InvIT regulations also provides for reducing mandatory sponsor holding in InvIT to 15, does away with the limit on the number of sponsors of InvIT and rationalising the requirements for private placement of InvIT.

The Sebi board also approved foreign investors to hold up to 15 per cent in stock exchanges in India. In July the government had hiked this stake from the earlier ceiling of 5 per cent. Foreign banks, insurance companies and depositories are now allowed to have higher stakes in Indian bourses.

For the first time, the Sebi board met at the National Institute of Securities Markets campus in Patalganga, about 80 kilometres from Mumbai. Sebi is setting up the NISM campus for imparting training and certification services for the capital markets.

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