Sebi Proposes To Allow QIBs To Invest In REITs and InvITs As Strategic Investors

Capital market regulator Sebi has released a consultation paper seeking to change the definition of ‘Strategic Investor’ for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trust (InvITs). Sebi has proposed to include Qualified Institutional Buyers (QIBs) and Foreign Portfolio Investors (FPIs) among strategic investors in its recent draft paper.

Who Are Strategic Investors

Presently, the definition of ‘strategic investor’ for REITs and InvITs includes infrastructure finance companies registered with the Reserve Bank of India (RBI) as Non-Banking Financial Companies (NBFCs), scheduled commercial banks, development financial institutions, systemically-important NBFCs registered with RBI, FPIs of insurance companies, mutual fund which invest in the offer size of the REIT or InvIT.

Strategic investors are those investors who get allocation of a REIT or the InvIT before the issue opens for subscription for other market participants. Strategic investors are mandatorily required to invest at least 5 per cent of the total offer size of the InVIT or REIT. They can invest up to 25 per cent of the total offer size. Such investors also have to hold their units for a lock-in period of 180 days from the date of listing of the units. By complying with the minimum investment of 5 per cent of the offer size and the 180-day lock-in period, strategic investors bolster the confidence of fresh applicants.

Why Has Sebi Proposed To Change The Definition

Sebi has proposed to change the current definition of strategic investors for REITs and InvITs to enhance the ease of doing business and to raise capital from a wider pool of investors. Thus in its consultation paper the market regulator has proposed that QIBs should also be allowed to participate as strategic investors in REITs and InvITs.

Sebi FPI’s should also be included as strategic investors for REIT Regulations and the InvIT issues. The market regulator has proposed that only FPI’s who are not individuals, corporate bodies or family offices will be allowed to participate as strategic investors.

The market watchdog also mentioned in the consultation paper that the present definition of strategic investors is narrow and excludes several potential investors who come under the QIB category such as public financial institutions, insurance funds, provident funds, and pension funds. The regulator added that these institutions already invest in REITs and InvITs, as such investments align with their investment mandates. Thus, such investors do not get a chance to apply under the Strategic Investor category for REITs and InvITs and on the other hand, the trusts are also not able to raise capital from such investors.

The market regulator has urged the public to provide comments on the proposal. The comments can be submitted by August 22, 2025 via the web-based form on Sebi’s website.