Sebi promotes broadened investor participation in infrastructure sector for enhanced liquidity

Mumbai: The Securities and Exchange Board of India (Sebi) aims to broaden the investor base in the infrastructure sector by including mutual funds, pension funds and retail investors as it believes that an expanded investor base will enhance liquidity in infrastructure securities.

"Our investor base is still narrow. Institutional investors dominate, while retail and foreign investors are cautious. Thin secondary market trading means liquidity is limited, which further discourages participation," said Sebi chairman Tuhin Kanta Pandey at the NaBFID Annual Infrastructure Conclave.

"A third challenge lies in project readiness and credibility. Many municipal bodies struggle with weak balance sheets or delayed clearances," Pandey said.


The capital market regulator also emphasised the importance of expediting asset monetisation across infrastructure sectors such as roads, railways, ports, airports, energy, petroleum & gas and logistics. Pandey said many state governments have yet to crystallise asset monetisation plans to further boost infrastructure creation.

"This gap needs to be addressed. A variety of products and models exist for such monetisation such as InvITs, REITs, various forms of public-private partnerships (PPP) and securitisation," he said.

While significant funds have been raised through municipal bonds, real estate investment trusts (REITs) and infrastructure investment trusts (InvITs), the amount remains small compared to the "trillions of rupees" required for the nation's development.

Pandey cautioned against excessive dependence on banks and government budgets as this could lead to concentration risks. In contrast, market-based instruments such as corporate bonds, InvITs, REITs and municipal bonds have the potential to spread risk among various participants.