Sebi Eases InvIT, REIT Rules for HNIs: Rs 25 Lakh Now Enough to Get Started

The Securities and Exchange Board of India (Sebi) drastically reduced the steep entry amount for Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs). Until now, anyone hoping to get in has had to part with at least Rs 1 crore, or in some cases even Rs 25 crore, depending on the structure. That threshold was never practical for most individual investors, even affluent ones. Starting in September, that changes. The new floor is set at Rs 25 lakh for privately placed InvITs.

The secondary market already allowed entry at Rs 25 lakh, but the primary market remained locked behind a much higher door. Sebi's latest move closes that gap and levels the playing field.

Why It Matters for High-Net-Worth Investors

This regulatory shift is significant for wealthy individuals and family offices that have long looked beyond mutual funds and equities. Infrastructure and real estate-backed products are no longer exotic luxuries; they're mainstream alternatives for those seeking predictable income streams.

InvITs, for instance, distribute cash flows coming from assets like toll roads, power projects, or telecom towers. These aren't glamorous, but they are steady, dependable, and insulated from day-to-day stock market mood swings. REITs, by contrast, give access to commercial property think sprawling office parks or large shopping malls. They allow investors to capture rental yields and appreciation without having to deal with the headaches of being a direct landlord.

Earlier, investors with a few tens of lakhs in deployable capital had no way to enter this space. The crores-only threshold kept them out. With Sebi's cut, the door is finally open for them to treat InvITs and REITs not as distant instruments for institutions but as part of a well-balanced portfolio.

Clarity on Public Shareholding

One of the persistent grey zones has been the definition of "public" in these structures. Sebi has cleaned that up too. Units held by sponsors, managers, or their relatives will not be counted as public holdings. That is, unless they qualify as institutional buyers' banks, mutual funds, pension funds. If they do, their units will count towards the public float.

This is not a cosmetic adjustment. Public shareholding rules directly affect liquidity and compliance thresholds. By redrawing the lines, Sebi has expanded the actual pool of units that fall under the public category, which in turn can improve investor confidence and market depth.

Relief for Holding Companies

Another knot that Sebi has chosen to untangle lies in how holding companies (holdcos) distribute cash. Previously, holdcos were obliged to pass through 100 per cent of the cash received from their project-level entities (SPVs) to the InvIT or REIT. That created artificial strain if the holdco itself was in deficit.

The revised rule introduces a measure of common sense: holdcos can now offset their own negative cash flows before passing on distributions, provided they disclose this clearly. It's a pragmatic fix. It acknowledges that structures are layered, and cash flow management cannot be forced into a one-size-fits-all pipeline.

Tighter Reporting, Simplified Disclosures

Sebi is also aiming at transparency. Timelines for quarterly reports, valuations, and financial statements have now been aligned. The earlier mismatch where valuation reports and financial statements ran on different schedules often confused investors. That loophole is now shut.

At the same time, disclosure formats for portfolio managers have been simplified. Investors will now get documents in a standard, less convoluted format, backed by a certificate in Form C before agreements are signed. This may sound bureaucratic, but for investors, it cuts through jargon and ensures accountability.

Of course, risks remain. InvITs and REITs are sensitive to interest rate movements, project performance, and the overall demand for real estate and infrastructure. A toll road with lower-than-expected traffic or an office park facing high vacancy can quickly turn "stable" cash flows into disappointments. However, investors with an adequate appetite for risk and a long-term horizon may find that the reduced entry barrier finally allows them to access assets that were previously out of reach.