Fundraising made easier

The Securities and Exchange Board of India (Sebi) has reduced the minimum subscription requirement as well as defined trading lots for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).

REITs have to offer their units in lots worth at least Rs.50,000 in initial and follow on public offers while InvITs’ offer must be a minimum of Rs.1 lakh per single lot.

Sebi norms pertaining to REITs and InvITs were amended on 22 April 2019. The guidelines for determination of allotment and trading lot size for REITs and InvITs on 23 April 2019.

Limits for aggregate consolidated borrowings and deferred payments, net of cash and cash equivalents, have been increased to 70% of the value of the InvIT assets from 49%, said Sebi.

The amendments provide flexibility to the issuers in terms of fundraising and increase investors’ access to these investment vehicles.
InvITs increasing their leverage beyond 49% will have to make additional financial disclosures along with specific details of available asset cover, debt-equity ratio, debt service coverage ratios, interest service coverage ratios and net worth.

Allotment to any investor shall be made in the multiples of a lot.

For initial listing, a trading lot should be of 100 units and during follow-on offer each lot shall consist of such number of units in its trading lot as it had at the time of initial offer.

Currently, the minimum REIT subscription from any investor in an initial offer and follow-on public offer is not less than Rs.2 lakh, while InvIT is Rs.10 lakh. fiinews.com