At present, insurers can invest up to 3% each in REITs and InvITs. Insurance Regulatory and Development Authority (IRDAI) is now examining a proposal to have a combined 6% exposure ceiling, allowing insurers to allocate capital across both asset classes depending on investment opportunities, people familiar with the discussions said.
REITs, which pool investor money into incomegenerating real estate assets, and InvITs — which own infrastructure assets such as highways, power transmission networks and renewable energy projects — are emerging as attractive long-duration yield products suited for institutional investors with stable liability profiles.
“National Highways Authority of India (NHAI) and industry representatives have sought greater flexibility for insurer participation in InvITs, particularly after the response to recent issuances,” a person aware of the discussions said. “Under the proposal being discussed, insurers would not get 6% separately for REITs and InvITs, but a merged 6% cap across both asset classes.”
Live Events
The discussions are at an early stage, and implementation could still take a few months, sources said.
The push for relaxation gathered pace after the recently launched Raajmarg InvIT backed by NHAI drew strong institutional participation. At the time of the issue, the benchmark 10-year government bond yield was around 6.95%, while the InvIT offered yields closer to 12%, making it more attractive for long-term investors seeking stable cash flows.
Insurance companies are estimated to have subscribed to nearly 20-25% of the Rs 6,000 crore issuance despite operating within restrictive exposure limits, one of the sources said. A few insurers, who participated in recent listed REITs, including Embassy Office Parks and Mindspace Business Parks, say that high-quality REIT and InvIT structures can generate stable long-term returns for them.
as a Reliable and Trusted News Source
(You can now subscribe to our )