Real estate investment trusts (Reits), infrastructure investment trusts (InvITs), and municipal bonds are set for robust growth over the next decade and can surpass the equity and debt markets in the quantum of money being mopped up, Securities and Exchange Board (Sebi) chairperson Madhabi Puri Buch has said.
She said the overall fundraising from the capital markets, including through equity and debt issuances, has crossed Rs 3.31 trillion in the first three quarters of the fiscal and is on course to grow 21 percent to scale to Rs 14.27 trillion by end March, from the Rs 11.8 trillion of the previous fiscal.
Fundraise has already crossed Rs 3.3 trillion in equity and Rs 7.3 trillion in debt in the first nine months of the year, with the overall mop-up reaching Rs 10.7 trillion, she said while addressing the Sebi organised event in Mumbai on Friday.
“Growth is so substantial that it could exceed the capital pumped in from equity and debt markets,” Buch said, adding “if we leverage the assets we have in this country—both existing and those yet to be built—Reits and Invits could see their capital double over the next decade.”
On the overall fundraising this fiscal, she said, “overall if we project for Q4, we will probably end somewhere like over Rs 14.27 trillion for the year in capital raising, both equity and debt."
Buch said money raised by real estate investments trusts (Reits), infrastructure investment trusts (InvITs) and municipal bonds (munibonds) has a very small contribution to the overall capital raising at around Rs 10,000 crore in the first three quarters of FY25. But she sees tremendous potential going forward that she said these there fundraising routes can grow over the next decade to even exceed the money raised from equity and debt.
Bush also said the Sebi is working to further expedite the time taken for clearing fundraising proposal, and committed to reduce the time taken for clearing SME IPO proposals. But she was quick to note that the Sebi has reduced to issue aging to a world record of three months for IPOs now, while the banks like SBI is giving in-principle loan approvals in 15 minutes, something she said that the Sebi has to take note of and act upon.
Buch said a lot of attention is paid to IPOs and Sebi is "flooded" with new applications on the same, but added other avenues including preferential issuances, institutional placements and rights issues are also important and may go unnoticed. She said Sebi has come up with a system for expediting rights issuances, and hoped that the industry adopts the same.
Complementing the mutual funds industry for making the market so fair and clean leading to a stupendous growth, she said the Rs 250-SIPs (systematic investment plans which have become an unparalleled success story) will be launched shortly.
Highlighting the significant role of the regulator in capital formation, which she described as the organization’s primary purpose, she said preferential issues and qualified institutional placements (QIPs) often go unnoticed but are crucial in the overall capital-raising process.
Buch emphasised the importance of the bond market, which she noted contributes significantly to corporate India's financing needs.
“The bond market accounts for almost Rs 60 for every Rs 100 lent by the banking system to corporate India. It plays a vital role in capital formation,” she explained. While the bond market may not see as much secondary market trading due to a predominance of buy-and-hold investors, it remains a crucial component of India’s financial ecosystem, she added.
Addressing concerns about the regulatory environment, Buch said Sebi’s efforts are geared toward easing business processes and reducing compliance burdens. “In the past year, only 21% of Sebi’s circulars focused on investor protection and risk reduction, which can increase compliance costs. The majority—42 percent—focused on easing business processes, and 21% on making compliance easier,” she explained.
“Contrary to the perception that regulation increases costs, a large portion of our efforts is aimed at development and ease of doing business.”