The Securities Exchange Board of India (SEBI), the nation's top market regulator, is preparing the final draft guidelines for real estate investment trusts (REITs) and it will be notified shortly, a top SEBI official said at an ASSOCHAM event held in New Delhi.
"We will soon notify guidelines for REITs," said Ananta Barua, Executive Director, Investment Management Department of SEBI, while inaugurating a national conference on 'REITs-Opportunities & the way forward,' organized by The Associated Chambers of Commerce and Industry of India (ASSOCHAM), recently.
“SEBI has set up two committees that are looking into specifying guidelines for issues and similarly for listing of those units a separate committee has been set up,” said Barua.
"We are trying to deepen the market and also bringing more investment products so that investment can be channelized to meet the needs of the economy," he added.
He also informed that REITs to be introduced mainly for commercial assets - office premises, industrial parks, IT parks, warehouses, apartments which are rental and not for residential properties.
The top SEBI official also said that REITs which is being compared with mutual funds but its a totally different product and is more similar to the IPO i.e. the equity shares as the asset would be there throughout their life.
He also informed that assets which can be put in should be completed assets i.e. investments which can be made should be in completed assets and not normally in under construction assets.
“This whole regime is based on disclosures and not on merits and as the SEBI we'll not go into whether this asset is good for REIT or not, here the parties will take the transactions as a lot of transparency has been given at all the levels, disclosure will be there,” said Barua.
He further said that before making these regulations SEBI had consulted the investors, not only in India but all over the world even the pension funds, sovereign wealth funds from many countries like SA, Qatar and others.
Earlier, in his address at the ASSOCHAM conference, managing director and chief executive officer of the Bombay Stock Exchange (BSE) said, “REITs gives us another asset class, its not a derivative for us derivatives are a good thing to do but investment is the only thing to do and REITs are basically in that category like SMEs.”
On the small and medium enterprises (SME) sector being allowed by the Government to be brought on to the BSE platform, Chauhan said, “Basically we’ve got a very good response on SME as in 2 years time we've now got 66 companies listed and in next two months 20-25 more companies will get listed so effectively we'll have 100 companies listed by this year end on the BSE SME platform itself.”
He informed that many good companies from areas like manufacturing, metals, information technology and others are coming to list on the BSE’s SME platform.
On the sidelines of the ASSOCHAM conference, Chauhan told the media that BSE would take appropriate action on the SEBI order to engage one or more independent consultants to review the entire sequence of events in conducting Rs 6,000 crore share sale of PSU firm NMDC.
“Currently our team is studying the order, we’ll take appropriate action,” Chauhan said.
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