SEBI Expands the ‘Strategic Investor’ Base for REITs and InvITs

In a bid to promote increased participation in investment trusts by long-term, regulated institutional investors, thereby reinforcing investor confidence and enhancing capital access for these investment vehicles, the Securities and Exchange Board of India (SEBI) has notified the Securities and Exchange Board of India (Real Estate Investment Trusts) (Third Amendment) Regulations, 2025 (REIT Amendment Regulations) and the Securities and Exchange Board of India (Infrastructure Investment Trusts) (Fourth Amendment) Regulations, 2025 (InvIT Amendment Regulations) on December 9, 2025. These amendments introduce substantive changes to the definitions of key terms such as ‘institutional investor’ and ‘strategic investor’, with the objective of broadening the pool of investors eligible to participate as strategic investors in public issues of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).

The REIT Amendment Regulations and InvIT Amendment Regulations shall collectively be referred as Amendment Regulations.

Key highlights of the Amendment Regulations are outlined below:

1. Introduction of ‘institutional investor’ category: 

The definition of the term ‘institutional investor’ has been inserted in the Securities and Exchange Board of India (Real Estate Investment Trusts) Regulations, 2014 (REIT Regulations). The term includes, (i) Qualified Institutional Buyers (QIBs); and (ii) family trusts or SEBI registered intermediaries with a net worth of more than INR 500,00,00,000 (as per the latest audited financial statements). 

Under the Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014 (InvIT Regulations), the corresponding definition has been amended to clarify that only those family trusts and SEBI‑registered intermediaries with a net worth exceeding INR 500,00,00,000 (based on the latest audited financials) qualify as institutional investors. These changes significantly refine the eligible investor set by focusing on high‑capacity, sophisticated entities, and help ensure that only participants with commensurate financial strength are recognised at the institutional level.

2. Alignment of the QIB definition with SEBI ICDR Regulations:

The existing definition of ‘qualified institutional buyer’ under the REIT Regulations and the InvIT Regulations have been substituted with a cross‑reference to the definition of the term under the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, ensuring consistency of QIB treatment and eligibility across equity and trust‑based offerings.

3. Broadened definition of ‘strategic investor’:

The definition of ‘strategic investor’ has been expanded to include a wider set of sophisticated market participants. It now covers: (i) institutional investors (i.e., QIBs and family trusts or SEBI‑registered intermediaries with a net worth of more than INR 500,00,00,000, based on the latest audited financial statements); (ii) foreign portfolio investors; (iii) non‑banking financial companies classified in the middle, upper or top layer; and (iv) such other entities as SEBI may specify from time to time, who invest, individually or collectively, at least 5% of the offer size of the investment trust.

 Such investments remain subject to applicable foreign exchange laws and, where the entity is regulated by another financial sector regulator, to prior consultation between SEBI and the relevant regulator before the entity is designated as a strategic investor.

Conclusion:

The Amendment Regulations further harmonise the investment trust framework with SEBI’s primary market regulations, clarify institutional and strategic investor categories and create a more coherent entry architecture for large, sophisticated capital into listed REIT and InvIT offerings.