Regulatory body SEBI suggests permitting pension and provident funds as potential strategic investors in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs)
SEBI Proposes Expansion of Strategic Investor Definition for REITs and InvITs
The Securities and Exchange Board of India (SEBI) has proposed a significant change to the definition of "strategic investors" in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) regulations. This move aims to broaden the investor base, deepen capital inflows, and enhance capital raising for infrastructure and real estate trusts in India.
Currently, the strategic investor category is limited to a narrow group of institutions, excluding many active long-term investors such as public financial institutions, insurance firms, provident funds, and pension funds—most of which qualify as Qualified Institutional Buyers (QIBs) under the SEBI (Issue of Capital and Disclosure Requirements) Regulations. SEBI’s proposal allows these QIBs to invest as strategic investors in REITs and InvITs.
Strategic investors are required to invest between 5% and 25% of the total offer size and receive allotments ahead of the public offer. For Foreign Portfolio Investors (FPIs), only institutional FPIs (excluding individuals, body corporates, and family offices registered as FPIs) will be eligible as strategic investors to maintain consistency with their current eligibility under QIB criteria.
The revision is intended to facilitate stronger pre-issue support, raise investor confidence, and increase capital inflow into key sectors critical to India’s growth. SEBI has invited public comments on the proposal until August 22, 2025.
It is worth noting that in April 2025, SEBI had amended REIT and InvIT regulations on other points such as independent director vacancies timeline, trustee responsibilities, permission of certain investments, and inter-se transfers among sponsors. However, these amendments do not specifically redefine strategic investors.
The change in the definition of strategic investor is a proposal put forth by the Securities and Exchange Board of India (SEBI). SEBI has suggested widening the definition of strategic investors to include QIBs as given under the SEBI (Issue of Capital and Disclosure Requirements). The current definition of a strategic investor includes foreign portfolio investors but will be revised to exclude individuals, corporate bodies, and family offices.
This revision is aimed at aligning with the investment mandate of long-term, stable, income-generating investments of these institutional investors. Strategic investors in REITs or InvITs function similarly to anchor investors in initial public offerings of companies. The inability to attract capital from these institutional investors is a consequence of the current definition.
The paper also suggests restricting foreign portfolio investors (FPIs) from being strategic investors due to their exclusion from QIBs under the listing regulations or ICDR Regulations. The revised definition aims to include more institutional investors like public financial institutions, insurance funds, provident funds, and pension funds in the strategic investor category.
References: [1] SEBI (2025). Consultation Paper on Revised Definition of Strategic Investors in REITs and InvITs. Retrieved from SEBI website [2] The Economic Times (2025). SEBI Proposes to Broaden REIT, InvIT Investor Base. Retrieved from The Economic Times [3] Business Standard (2025). SEBI Proposes to Expand Strategic Investor Definition for REITs, InvITs. Retrieved from Business Standard [4] Mint (2025). SEBI Amends REIT, InvIT Regulations on Other Points. Retrieved from Mint
The Securities and Exchange Board of India (SEBI) has proposed a change to the definition of "strategic investors" in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) regulations, intending to align with the investment mandate of long-term, stable, income-generating investments of institutional investors.
Under the SEBI (Issue of Capital and Disclosure Requirements) Regulations, QIBs such as public financial institutions, insurance firms, provident funds, and pension funds may be included in the revised definition of strategic investors for REITs and InvITs, expanding the investor base and attracting capital from these institutional investors.
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