New Delhi: Markets regulator Securities and Exchange Board of India (Sebi) on Monday put in place detailed guidelines for public issuance of Real Estate Investment Trusts (REITs) including allocation of units to institutional investors. The trusts, its promoters and directors, which have been barred from accessing the securities markets, or those who are in the “wilful defaulter" list, would not make any public issue, Sebi said in a circular.

In an issue made through the book building process, up to 75% would be allocated to institutional investors and 25% to other investors. To facilitate growth of REITs, Sebi last month notified revised and easier regulations for raising capital through this instrument.

Sebi had notified the REIT Regulations in 2014, allowing setting up of and listing of such trusts, which are very popular in some advanced markets. However, not a single trust has been set up in India as of now as investors await further measures, including tax breaks, to make these instruments more attractive.

Spelling out norms for REIT’s public issue, Sebi said that such trusts can allocate up to 60% of the portion available for allocation to institutional investors to anchor investors. The anchor investor would make an application of a value of at least Rs10 crore in the public issue. Allocation to such investors would be on a discretionary basis and subject to the minimum of two investors for allocation up to Rs250 crore and minimum of 5 investors for allocation of over Rs250 crore.

The merchant banker would make arrangements for distribution of the application form along with a copy of the abridged version of the offer document. An issue would be opened after at least five working days from the date of filing the offer document with Sebi. The issue would be kept open for at least three working days but not more than 30 days.

However, in case the price band in a public issue made through the book building process is revised, the bidding period disclosed in the final offer document would be extended for a minimum period of one working day, provided that the total bidding period would not exceed 30 days.

“The manager on behalf of the REIT shall make prompt, true and fair disclosure of all developments taking place between the date of filing offer document with the board and the date of allotment of units which may have a material effect on the REIT, by issuing public notices," Sebi said. “No REIT shall alter the terms of units which may adversely affect the interests of the holders of that units unless a resolution to that effect is passed at a meeting of the unit holders in accordance with ...REIT Regulations," it added.

The trust would have to appoint merchant bankers at least one of whom would be a lead merchant banker and would also appoint other intermediaries, in consultation with the merchant banker, to carry out the obligations relating to the issue.

The draft offer document would be filed with Sebi and the designated stock exchanges. In all issues, the REIT would accept bids including using Applications Supported by Blocked Amount (ASBA) facility. “No REIT shall make a public issue of units, if the REIT or parties to the REIT or the promoter or director of parties to the REIT is debarred from accessing the securities market... is in the list of the wilful defaulters published by the Reserve Bank of India," Sebi said.

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