As part of its consistent efforts to boost the product, the Securities and Exchange Board of India (SEBI) had permitted listed real estate investment trusts (REIT) to raise funds from the primary market through follow on public offerings, preferential issues, institutional placements and rights issues. The legal framework supporting such fund raising routes have been notified by SEBI from time to time. On 13 March 2020, SEBI issued a circular (Circular), amending and clarifying codified provisions guiding fund raising by listed REITs this newsletter discusses and analyses the Circular.
Notable amendments bought about by the Circular
- Fast-track rights issues
SEBI has permitted listed REITs to undertake a rights issue to the REIT meeting certain eligibility conditions. A fast-track rights issue is a framework through which the timeline of a rights issue is "fast-tracked". In India, this process includes exemption from SEBI review of the letter of offer, thereby reducing the timelines by a couple of months approximately.
A listed REIT meeting the following eligibility conditions can undertake a fast track rights issue:
- the units must be listed on a stock exchange for a period of at least three years prior to the record date d mean any recognised stock exchange, by implication;
- all units must in dematerialised form as on the record date;
- the average market capitalisation of public unitholding should be at least `250 crores;
- the REIT is in compliance with the listing and disclosure requirements prescribed by the REIT Regulations. We read this requirement to mean that the REIT must be in compliance with such requirements as on the date on which the letter of offer is approved by the board of directors;
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