RBI allows foreign investment in REITs, InvITs and AIFs

With a view to rationalize foreign investment regime for Alternative Investment vehicles and to facilitate foreign investment in collective investment vehicles for Real Estate and Infrastructure sectors, RBI vide notification dated April 21, 2016, has allowed foreign investment in units issued by Real Estate Investment Trusts (“REITs”), Infrastructure Investment Trusts (“InvITs”) and Alternative Investment Funds (“AIFs”) (collectively as “Investment Vehicles”) which are regulated by Securities and Exchange Board of India (“SEBI”).

The key features of the new investment regime are as follows:

  • A person resident outside India, including a Registered Foreign Portfolio Investor (“RFPI”) and a Non-Resident Indian is now permitted to invest in units of Investment Vehicles.
  • There is no restriction on selling or transferring of units purchased by any foreign investor.
  • Downstream Investment by an Investment Vehicle will be deemed to be foreign investment if either the Sponsor / Manager / Investment manager is not Indian ‘owned and controlled’, and such downstream investment shall have to conform to FDI sectoral caps.