Sebi Board Meet: Sebi (Securities and Exchange Board of India) The board has approved the real estate investment trust (Reits) to give equity status, while the hybrid status for the Infrastructure Investment Trust (Invits) has retained. The release issued by SEBI states, “The board has approved amendment in SEBI (Mutual Fund) Regulation, 1996. Under this amendment, Reits will be re-classified as” equity “and will be kept in the purpose of investing” Hybrid “for the purpose of investing mutual funds and special investment funds.”
The old status of Invits intact
This release further states that re-classification proposals have been made keeping in mind the characteristics of Reits, among them. That is, this decision has been taken to keep pace with global practices keeping in mind the characteristics like more symmetry and relatively high liquidity with the equity of reits. Invits, on the other hand, are mainly private placement products, in which cash flow is more stable. But liquidity is low. In such a situation, it has been proposed to maintain it in the hybrid category itself.
Expect an increase in investment by mutual fund schemes in reits
Even more important is that according to the re-clarification of the reits, the investment made by the mutual funds will be considered within the allotment limit fixed for the equity part and will be approved to include them in equity indexes. This will lead to an increase in investment by mutual fund schemes in reits.
Changes in the definition of strategic investor
Apart from this, SEBI has also approved the definition of strategic investor under the rules of Reit and Invit and has also approved them to bring them under QIB. Regulator also decided to make changes in the governance framework of stock exchanges. For this, the appointment of two executive directors will be made mandatory.
Earlier, Reits and Invits were classified as hybrid funds as they have characteristics of both equity and date investment and provide a unique mail of earning growth and capital growth.
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