SEBI Introduces Depositary Receipts Framework For REITs, InvITs

India’s markets regulator, the Securities and Exchange Board of India (SEBI), has introduced a framework allowing foreign investors to invest in real estate investment trusts (REITs) and infrastructure investment trusts (InvITs) through select overseas stock exchanges.

This framework aims to attract greater foreign capital into India’s real estate and infrastructure sectors. The proposal was initially introduced in August and received SEBI’s approval in September.

Under the mechanism, depositary receipts will be issued by foreign institutions against securities held with domestic custodians. These foreign-currency instruments will allow investors to trade units of Indian REITs and InvITs on international exchanges.

According to the framework, trusts planning to list in India while simultaneously issuing depositary receipts must obtain approval from both the domestic stock exchange and the overseas exchange concerned.

Any fresh issuance of depositary receipts will require approval from at least 75% of the unitholders. Additionally, the price of units issued against depositary receipts cannot be lower than the price offered to Indian investors in a similar offering.

The framework also specifies that fresh depositary receipts issued against units of privately placed InvITs can be subscribed to only by foreign institutional investors and corporate bodies.

REITs and InvITs already permit foreign investment in India, subject to applicable government and Reserve Bank of India regulations. The new framework is expected to provide overseas investors with an additional route to access India’s real estate and infrastructure investment markets.