The Securities and Exchange Board of India (SEBI) on Monday allowed Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) to raise funds from foreign investors through depository receipts (DRs), providing them an additional route to access overseas capital, the Hindu BusinessLine reported.

Source: The Hindu BusinessLine

Under two separate circulars, SEBI specified the framework for issuing DRs against units of REITs and InvITs and listing them on exchanges at the International Financial Services Centre (IFSC) in GIFT City — India International Exchange (India INX) and NSE International Exchange. Reuters, reporting the same move, said the framework lets foreign investors buy into Indian REITs and InvITs through select overseas exchanges.

Source: Reuters via TradingView

Depository receipts are foreign currency-denominated instruments issued by a foreign depository against underlying units held with a domestic custodian. The framework will allow foreign investors, including non-resident Indians (NRIs), to invest in Indian REITs and InvITs without directly purchasing their units on domestic exchanges, IANS reported.

Source: IANS via The Freedom Press

Approval and eligibility conditions

Any fresh issue of DRs will require prior approval from unitholders, with at least 75 per cent of the votes cast in favour of the resolution; that approval will not be required for subsequent offerings within the overall limit already approved by unitholders. Where existing unitholders transfer their units for issuing DRs, the REIT or InvIT must provide all existing unitholders an opportunity to participate in the offering.

DR holders and their beneficial owners cannot be persons resident in India. SEBI has also prescribed eligibility conditions for issuers and for unitholders transferring units: they should not be debarred from accessing the capital markets, classified as wilful defaulters or identified as fugitive economic offenders. The manager of the trust must appoint a merchant banker to oversee compliance with the DR requirements, IANS reported.

Cooling-off period cut for privately listed InvITs

Separately, SEBI reduced the cooling-off period for offer-for-sale (OFS) transactions involving illiquid units of privately listed InvITs to eight weeks from 12 weeks earlier, with immediate effect. The regulator said privately listed InvITs face liquidity constraints because of their high trading lot sizes, which limit participation largely to institutional investors, corporates and high-net-worth individuals.

The move is expected to enhance the global visibility of Indian REITs and InvITs while broadening their access to international capital, IANS reported.