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Sebi allows FPIs to invest in REITs, AIFs and bonds under default

Livemint:  March 16, 2016

Mumbai: The Securities and Exchange Board of India (Sebi) on Tuesday allowed foreign portfolio investors or FPIs to invest in units of real estate investment trusts (REITs), infrastructure investment trusts (InvIts) and category III alternative investment funds (AIFs), which typically includes hedge funds.

The capital market regulator said the move follows an amendment to the foreign exchange management norms by Reserve Bank of India (RBI) on 16 November, permitting investment by FPIs in units of such entities.

Sebi said FPIs will be allowed to hold up to 25% stake in category III AIFs. Additionally, on the lines of a 26 November RBI decision to allow FPIs to invest in corporate bonds under default, the market regulator said it will allow FPIs to acquire non-convertible debentures or bonds, which are under default, either fully or partly, in the repayment of principal on maturity or principal instalment in the case of an amortising bond.

However, such non-convertible debentures and bonds, restructured based on negotiations with the issuing firm, must have a minimum revised maturity period of three years to allow an FPI investment.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.