SEBI Plans to Allow Foreign and Institutional Investors as Strategic Partners in REITs and InvITs

The Securities and Exchange Board of India (SEBI) has proposed new rules to attract more investors into Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs). The aim is to increase investments and strengthen the trust of public investors. SEBI wants to allow foreign investors and Qualified Institutional Buyers (QIBs) to become strategic investors in REITs and InvITs. Strategic investors are those who invest in the trust before it opens for public investment. They must put in at least 5% of the total offer and can invest up to 25%. Their investment is locked in for 180 days after the listing.

This move is expected to give more confidence to regular investors when a trust launches its public offer. These strategic investors will have to sign an agreement with the trust and provide full details, like their names and the number of units bought, in the offer documents.

Currently, many big institutional investors, such as pension funds, insurance companies, and public financial institutions, are not allowed to apply as strategic investors. SEBI now plans to change this by widening the definition. The new definition may include:

• Infrastructure finance companies registered with the RBI
• Scheduled commercial banks
• Development financial institutions
• Systemically important NBFCs
• Mutual funds and insurance companies regulated by IRDAI

However, Foreign Portfolio Investors (FPIs) who are individuals, companies, or family offices will not be considered QIBs and will remain outside this category. SEBI has asked the public to share their views on this proposal by August 22, 2025.