Sebi: Sebi viewing to include REITs in indices to improve liquidity: Chief

New Delhi: Securities and Exmodify Board of India (Sebi) chairman Tuhin Kanta Pandey on Friday stated the regulator is considering the inclusion of real estate investment trusts (REITs) in market indices “through an appropriate glide path”, a relocate that can potentially improve liquidity for these instruments and boost their appeal. Sebi is also weighing a proposal to expand the pool of liquid mutual fund schemes in which REITs and infrastructure investment trusts (InvITs) can invest, while protecting investor interests, he added.

“We are also exploring whether private InvITs, too, may invest in greenfield projects with adequate safeguards,” Pandey stated.

Pandey was addressing the National Conclave on REITs & InvITs in New Delhi. These steps, aimed at ensuring greater ease of doing business for these vehicles, would be taken after due stakeholder consultations, he added.
REITs and InvITs are investment vehicles that allow investors to invest in real estate and infrastructure assets, respectively, without owning the physical property.

Pandey stated Sebi is actively engaging with institutional investors to deepen their participation in these instruments.

Sebi is also coordinating with the finance minisattempt and several state governments to accelerate public-asset monetisation, he stated.
“We are working with Irdai (Insurance Regulatory and Development Authority of India), PFRDA (Pension Fund Regulatory and Development Authority) and Employees’ Provident Fund Organisation (EPFO) to facilitate greater participation from their entities under their purview,” he added.
Pandey, however, conceded that the market for these instruments is still at a nascent stage, despite their immense potential. For its part, Sebi will continue to come out with necessary frameworks and guardrails. However, indusattempt sponsors, managers, advisors and intermediaries must believe in the asset class’ potential and support build depth and liquidity, he stressed.

He also observed that investor awareness about these instruments remains low. Surveys suggest only about 10% of retail investors are aware of these investment vehicles, with penetration below 1%.

“This must modify,” he stressed. “The retail investor should see these instruments as natural options in their portfolios, alongside equities, mutual funds, bonds and bank deposits.” On the primary market side, Sebi will continue to simplify capital raising through initial public offerings, rights issues, qualified institutional investments and bonds, he stated.