The Securities and Exchange Board of India (SEBI) has taken a significant step to increase investor participation and liquidity in infrastructure investment trusts ( InvITs ) by reducing the trading lot size for privately placed InvITs to Rs 25 lakh. This move, effective from September 26, aims to broaden the investor base by making InvIT units more accessible to a wider range of investors.
Previously, the minimum trading lot size for InvITs in the secondary market was Rs 1 crore, or Rs 2 crore if the InvIT had at least 80% of its assets in completed and revenue-generating projects. By lowering this threshold to Rs 25 lakh, SEBI aims to attract more investors, thereby enhancing liquidity and promoting portfolio diversification.
InvITs are crucial for financing infrastructure projects in India, as they allow investors to pool funds for large-scale infrastructure ventures. With the revised lot size, SEBI hopes to attract more retail investors, boosting the overall market for InvITs. Increased participation is expected to lead to greater liquidity, thus making these investment vehicles more attractive and efficient.
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In addition to the changes in trading lot size, SEBI has also introduced several amendments to reduce the compliance burden and enhance ease of doing business for InvITs and Real Estate Investment Trusts (REITs).
Notably, the market regulator has also shortened the timeline for distributions to unitholders to five working days from the date of declaration, improving efficiency and ensuring quicker availability of funds to investors.
SEBI has also allowed InvITs and REITs to convene unitholder meetings with shorter notice periods, provided the required consent is obtained. For annual meetings, consent from at least 95% of unitholders is required, while for other meetings, a majority consent is sufficient.
Furthermore, to encourage greater participation from unitholders, SEBI mandates that all meetings must offer an option for virtual attendance through video conferencing or other audio-visual means.
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The measures are expected to play an impactful role in mobilizing private investment for India’s growing infrastructure needs.
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