Reits, Invits, muni bonds could surpass equity, debt in a decade: Buch
Fundraises through real estate and infrastructure investment trusts, along with municipal bonds, could surpass ₹3.3 trillion mobilized via equities and ₹7.3 trillion through debt last fiscal, says Sebi chief.
Fundraises through real estate and infrastructure investment trusts, along with municipal bonds, could surpass capital mobilized through equities and debt over the next decade, India’s market regulator’s chair Madhabi Puri Buch said on Friday in her first public appearance in about three months.
“The growth is so substantial that it could exceed the capital pumped in from equity and debt markets,” said Buch, chairperson of the Securities and Exchange Board of India (Sebi), referring to the ₹3.3 trillion raised through equity and ₹7.3 trillion via debt in the last financial year.
“If we leverage the assets we have in this country—both existing and those yet to be built—Reits and Invits could see their capital double over the next decade,” she said.
The opportunity could be realized through investments from both retail and institutional investors, facilitated by robust investment vehicles such as mutual funds, Buch said at National Institute of Securities Markets' (NISM) 'Samvad' symposium.
Real estate investment trusts or Reits are mutual fund-like listed instruments that pool in income-yielding real estate assets, allowing investors to take exposure. Similarly, infrastructure investment trusts or Invits allow investors to bet on infrastructure assets. In FY23-24, investors raised ₹40,000 crore through Invits/Reits.
Among the allegations that Buch faced from Hindenburg Research was that she implemented a raft of legislation around Reits that have benefited Blackstone, where her husband was a senior partner. Buch, who spoke for the first time in public since the series of accusations, has denied any wrongdoing.
In her speech, Buch also highlighted the market regulator’s significant role in capital formation.
“For the last nine months, ₹3.3 trillion has been raised in equity, and with another quarter to go, we anticipate a total of ₹4.3 trillion by year-end,” Buch said. She pointed out that preferential issues and qualified institutional placements (QIPs) often go unnoticed but are crucial in the overall capital-raising process.
Equity, however, represents only a part of the total capital raised. "In FY2024-25, capital formation reached ₹10.7 trillion, with ₹7.3 trillion coming from the primary debt market, a sector that is sometimes underreported.” She said by year-end, the total capital raised—combining both equity and debt—could exceed ₹14 trillion.
“The bond market accounts for almost ₹60 for every ₹100 lent by the banking system to corporate India. It plays a vital role in capital formation,” she explained. While the bond market may not see as much secondary market trading due to a predominance of buy-and-hold investors, it remains a crucial component of India’s financial ecosystem, she added.
Sebi plays a critical facilitating role in capital formation by ensuring that regulations do not hinder, but promote market growth, according to Buch. Technological advancements, including AI-driven projects within Sebi, are helping expedite the processing of public issue applications, she added.
Amid concerns about the regulatory environment, Buch said Sebi’s efforts are geared toward easing business processes and reducing compliance burdens. “In the past year, only 21% of Sebi’s circulars focused on investor protection and risk reduction, which can increase compliance costs. The majority—42%—focused on easing business processes, and 21% on making compliance easier,” she said.
The regulator introduced a circular in October requiring specific due diligence of investors and investments of Alternative Investment Funds and a circular in June seeking disclosures of material changes for Foreign Portfolio Investors.
“Contrary to the perception that regulation increases costs, a large portion of our efforts is aimed at development and ease of doing business.”
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