SEBI Amends Norms To Broaden Strategic Investor Definition For REITs, InvITs

Market regulator SEBI has broadened the definition of 'strategic investor' for REITs and InvITs, aimed at widening investor participation in their public issues.

The expanded criteria will make it easier for these trusts to attract capital, support greater flexibility and improve the overall ease of doing business.

The regulator believed that the current definition of strategic investor under the REIT (real estate investment trust) and InvIT (infrastructure investment trust) framework is narrow and excludes several large institutional investors, such as pension funds, provident funds, and insurance funds.

These entities, though active participants in REITs and InvITs due to their preference for long-term and stable income-generating assets, were not eligible to be categorised as strategic investors before the amendments.

To address this gap and promote ease of doing business, the SEBI has amended the definition of strategic investor to provide that an entity that is considered a QIB (Qualified Institutional Buyer) may apply as a strategic investor, according to separate notifications dated December 9.

This includes a wider pool of institutions, such as public financial institutions, pension and provident funds, alternative investment funds, state industrial development corporations, family trusts and intermediaries registered with a net worth of more than Rs 500 crore; middle, upper and top-layer non-banking finance companies. The amendment came after SEBI's board approved a proposal in this regard in September.

In November, SEBI reclassified REITs as equity-related instruments to promote higher participation by mutual funds and specialised investment funds (SIFs). It further said that InvITs will continue to be classified as hybrid instruments.

'With effect from January 1, 2026, any investment made by mutual funds and SIFs in REITs shall be considered as an investment in equity-related instruments,' the regulator had stated.