Sebi Approves REITs as Equity, Expands Strategic Investor Definition
Sebi has approved the classification of Real Estate Investment Trusts (REITs) as equity and aims to broaden the definition of ‘strategic investor’ to boost market participation. Here’s what you need to know about the latest reforms.
SebiReitsEquityStrategic InvestorCapital MarketsReal Estate NewsSep 12, 2025
Sebi Chairman Tuhin Kanta Pandey also announced that the capital market regulator plans to broaden the definition of ‘strategic investor’ to attract more investors. These reforms are expected to deepen capital markets and attract more domestic and international capital into the Indian market.
Here are 10 key announcements made by Sebi on Friday:
1. IPO Ease for Big Firms : Sebi lowered the minimum public offer size for very large companies and extended the time they have to meet the minimum shareholding norms. This move is designed to make it easier for large corporations to go public.
2. Higher Anchor Investment : The regulator increased the anchor investor allocation from the current one-third level to 40% of the initial public offering (IPO). This change is intended to attract more significant initial investments and stabilize the IPO process.
3. Investor Access : Sebi will offer ‘single-window clearance’ to trusted foreign investors such as central banks, sovereign wealth funds, and regulated global institutions. This simplifies the process for these entities to invest in the Indian market.
4. Related Party Transactions : Sebi revised the threshold for shareholder approval requirements for related party transactions. This aims to streamline the approval process and reduce unnecessary bureaucracy.
5. Foreign Portfolio Investors in IFSCs : The markets regulator announced that Retail schemes in International Financial Services Centres (IFSCs) can now register as foreign portfolio investors (FPIs). This opens up new opportunities for international investors to participate in the Indian market.
6. Flexible AIF Framework : Sebi created a new category of Alternative Investment Funds (AIFs) exclusively for accredited investors, with relaxed regulations. This move is designed to attract more high-net-worth individuals and institutional investors.
7. Large Value Funds Relaxations : Sebi revised the minimum investment threshold for accredited investors from ₹70 crore to ₹25 crore. This makes it easier for more investors to qualify and participate in large value funds.
8. Classification of REITs : Real Estate Investment Trusts (REITs) are now to be treated as equity, while Infrastructure Investment Trusts (InvITs) will remain as hybrid instruments for the purpose of investments by mutual funds and specialized investment funds. This classification is expected to attract more institutional and retail investors to REITs.
9. MF Distributors Boost : Mutual Fund distributors will receive up to 1% incentive for net inflows from beyond the top 30 cities, along with extra commissions for investments by the women investor category. This initiative is designed to promote financial inclusion and encourage more women to invest.
10. Governance and Oversight : Sebi will review the regulatory framework for registrars and approve amendments for investment advisers, research analysts, and market infrastructure institutions. This aims to enhance the overall governance and oversight of the capital markets.
The reforms approved by Sebi are expected to deepen capital markets while enhancing investor protection to attract more domestic and international capital into the Indian market. Along with the reforms, the capital market regulator decided to make it easier for low-risk foreign investors to participate in the Indian securities market, a move aimed at simplifying compliance and enhancing the country's attractiveness as an investment destination.
Frequently Asked Questions
What is Sebi's recent decision regarding REITs?
Sebi has approved the classification of Real Estate Investment Trusts (REITs) as equity. This decision is expected to attract more institutional and retail investors to REITs.
How does Sebi plan to broaden the definition of ‘strategic investor’?
Sebi plans to broaden the definition of ‘strategic investor’ to attract more investors and boost market participation. The details of the expanded definition are yet to be announced.
What changes did Sebi make to IPOs for large companies?
Sebi lowered the minimum public offer size for very large companies and extended the time they have to meet the minimum shareholding norms. This makes it easier for large corporations to go public.
How will the new AIF framework benefit accredited investors?
Sebi created a new category of Alternative Investment Funds (AIFs) exclusively for accredited investors, with relaxed regulations. This makes it easier for high-net-worth individuals and institutional investors to participate in AIFs.
What incentives are offered to Mutual Fund distributors?
Mutual Fund distributors will receive up to 1% incentive for net inflows from beyond the top 30 cities, along with extra commissions for investments by the women investor category. This initiative promotes financial inclusion and encourages more women to invest.
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