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SEBI has expanded the eligibility norms for strategic investors in REITs and InvITs to widen institutional participation. Under the revised rules, any Qualified Institutional Buyer can now invest as a strategic investor, including pension and provident funds, insurers, alternative investment funds, family trusts, state bodies and large NBFCs. SEBI said the earlier framework was restrictive and excluded several institutions that actively invest in long-term, income-generating assets. The changes aim to improve ease of doing business and deepen the investment trust market. The move follows SEBI’s recent reclassification of REITs as equity-related instruments for mutual funds, supporting stronger capital flows into real estate and infrastructure assets.
The Securities and Exchange Board of India (SEBI) has widened the eligibility criteria for strategic investors in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs), following amendments notified on December 9. The regulator said the earlier definition had been restrictive and excluded several large institutional participants that have traditionally shown strong interest in long-term, yield-generating assets. Advertisement
Under the revised framework, any entity classified as a Qualified Institutional Buyer (QIB) is now permitted to apply as a strategic investor in these public issues. This expanded category covers a broader universe of institutions such as pension funds, provident funds, public financial institutions, insurance funds, alternative investment funds, family trusts, state industrial development corporations, and registered intermediaries with a net worth exceeding INR 500 crore. SEBI has also included middle, upper and top-layer non-banking finance companies within the eligible pool.
The regulator noted that although many of these entities actively invest in REITs and InvITs due to their preference for stable, income-generating assets, they were previously excluded from being designated as strategic investors under the earlier rules. The amendment aims to correct this mismatch, broaden participation, and support greater ease of doing business for issuers.
SEBI’s board had approved the proposal in September as part of a wider effort to strengthen the investment trust ecosystem. The regulator has been taking steps over recent months to deepen institutional participation and expand the investor base for these products.
In November, SEBI reclassified REITs as equity-related instruments to enable higher participation from mutual funds and specialised investment funds (SIFs). Under the revised rule, effective 1 January 2026, any investment made by mutual funds and SIFs in REITs will be treated as exposure to equity-related instruments, while InvITs will continue to be categorised as hybrid instruments.
The move is expected to improve capital flows towards income-generating real estate and infrastructure assets, while offering issuers additional flexibility in structuring public offers within a more inclusive institutional framework.
Source - PTI
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