The Securities and Exchange Board of India (Sebi) has lowered the minimum investment threshold in the primary market for Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs) to Rs 25 lakh. This significant move, effective September 2025, aligns the primary market with the secondary market and makes these asset classes more accessible to a wider set of investors.
Reduced Entry Barrier for Investors
Starting this September, investors can now participate in privately placed InvITs by investing as low as Rs 25 lakh, compared to previous steep thresholds of Rs 1 crore or even Rs 25 crore, depending on the asset mix. This harmonisation closes a longstanding gap where the secondary market minimum lot size was already Rs 25 lakh, but the primary market threshold was much higher.
Why This Matters
- Opens opportunities for affluent individuals and family offices desiring infrastructure and real estate income streams beyond stocks, bonds, and mutual funds
- InvITs typically provide stable cash flows from toll roads, power projects, and telecom towers
- REITs offer exposure to commercial real estate such as office parks and malls, capturing rental and appreciation benefits
- Reduction in ticket size lowers entry barriers, allowing more investors to diversify portfolios with yield-generating assets
Clarification on Public Unitholders
Sebi also refined the classification of “public” unitholders. Under the new norms, units held by related parties of the sponsor, investment manager, or project manager will no longer be counted as public holders unless such entities qualify as Qualified Institutional Buyers (QIBs). This adjustment expands the pool considered public shareholding, improving compliance and governance.
Relief for Holding Companies
Another important change allows holding companies (holdcos) to offset their own negative cash flows against inflows from underlying special purpose vehicles (SPVs) before distributing funds to InvITs and REITs, provided they disclose adequate information. Previously, holdcos were required to pass through 100% of SPV cash inflows, regardless of their own financial position.
Enhanced Transparency and Reporting
Sebi has aligned timelines for quarterly, valuation, and financial reporting to eliminate mismatches, improving transparency. Furthermore, the regulator has simplified the format for portfolio manager disclosures, requiring certificates before client agreements are signed.
FlexInsights Take
Sebi’s regulatory easing by lowering the investment threshold to Rs 25 lakh is a pivotal step in democratizing access to the stable, yield-generating infrastructure and real estate asset classes. This is expected to broaden investor participation, enhance liquidity, and foster market depth. For wealthy individuals and family offices, it offers a compelling diversification route beyond traditional equity and debt instruments. Improved clarity in public shareholding and operational relief for holding companies further strengthens governance and cash flow management. Overall, these reforms position InvITs and REITs as practical, mainstream investment options suitable for medium- to long-term portfolio allocation.
