INSUBCONTINENT EXCLUSIVE:
New Delhi: Markets regulator Sebi on Friday put in place a framework for the rights issue of units by listed REIT and InvITs, calling for
disclosure of objects of the issue, financial details in the offer document by such investment instruments.
In two separate circulars, the
regulator specified the manner of issuance of units under the rights issue by listed real estate investment trust (REIT) and infrastructure
investment trust (InvIT).
Sebi said the issuer will have to disclose objects of the issue, related-party transactions, valuation, financial
details, review of credit rating and grievance redressal mechanism in the placement document.
The Securities and Exchange Board of India
(Sebi) had first notified REITs and InvIT Regulations in 2014, allowing setting up and listing of such trusts which are popular in some
On the other hand, Embassy Office Parks REIT is the only listed real estate investment trust.
Sebi has allowed listed REIT and InvIT to make
a rights issue of units.
This is subject to several conditions including these investment vehicles obtaining in-principle approval of the
stock exchanges for listing of units proposed to be issued, besides none of the respective promoters or partners or directors of the sponsor
or manager or trustee of the REIT and InvIT is a fugitive economic offender and should not be barred from the securities market.
With regard
to pricing, Sebi said that the investment manager on behalf of the REIT and InvIT, in consultation with the lead merchant banker(s), will
decide the issue price before determining the record date.
The investment manager, on behalf of InvIT and REIT need to announce the record
date to stock exchange at least three working days (excluding the date of intimation and the record date) prior to the record date
InvIT and REIT will not withdraw its rights issue after announcement of the record date.
With regard to manner of issuance of unit, Sebi
said that units shall be allotted in the dematerialised form only and shall be listed on the stock exchange where the units of the REIT and
InvIT are listed.
"The minimum subscription to be received in the rights issue shall be 90 per cent of the issue size through the letter of
offer, " Sebi noted.
The InvIT and REIT "shall not make any further issue of units in any manner whether by way of public issue, rights
issue, preferential issue, qualified institutions placement, institutional placement, issue of bonus shares or otherwise during the period
between the date of filing the draft letter of offer with the board and the listing of the units offered through the letter of offer or
refund of application monies."
In November, Sebi had come out with guidelines pertaining to preferential issue as well as institutional
placement of units by a listed REIT and InvIT.
