REITs, InvITs poised for Global Access as SEBI Proposes Foreign Currency Depository Receipts (DRs)

REITs, InvITs poised for Global Access as SEBI Proposes Foreign Currency Depository Receipts (DRs)​

Securities and Exchange Board of India (SEBI) has introduced a major regulatory proposal aimed at unlocking global capital flows into India's real estate and infrastructure investment trust market. The regulator proposes enabling Real Estate Investment Trusts (REITs) and publicly-listed Infrastructure Investment Trusts (InvITs) to raise overseas capital by issuing Depository Receipts (DRs).

This move is set to significantly broaden foreign investor access. SEBI has proposed a new framework that would permit the issuance of foreign currency-denominated DRs against units of eligible REITs and publicly listed InvITs. The initiative seeks to attract global investment toward these vital real asset classes in India.

Expanding Investor Reach through Depository Receipts​

Currently, the units of both REITs and InvITs are denominated entirely in Indian rupees and are traded on local stock exchanges. This limits their appeal to international investors who operate within foreign currency markets.

The proposed framework addresses this limitation. By issuing DRs in permissible jurisdictions, REITs and InvITs will gain an additional avenue for subscription. These DRs will allow foreign investors to trade the underlying assets using foreign currency on specialized international exchanges.

How the SEBI Proposal is Structured​

SEBI's consultation paper details the necessary regulatory adjustments. While existing schemes already allow the issuance of DRs against eligible securities, REIT and InvIT regulations lack a specific enabling provision for such international issuances.

The proposed regulation addresses this gap directly. It outlines how REITs and InvITs can invite foreign subscriptions by leveraging these new DRs. This facility is designed to supplement existing guidelines set by the Reserve Bank of India (RBI) and the government.

Investment Scope and Market Impact​

Attracting massive foreign capital into real assets is a key objective of this proposal. By facilitating access through DRs, SEBI aims to supercharge investor interest in India's investment trust ecosystem.

The issuance mechanism ensures that both REITs and publicly listed InvITs can participate equally in global markets. This move signals the regulator's intent to mature and internationalize the market for these instruments. Privately-listed InvITs have been explicitly excluded from availing this specific facility.