Monday, December 4, 2023

SECP Allows AMCs to invest in private or non-listed real estate investments

The Securities and Exchange Commission of Pakistan (SECP) has allowed asset management companies (AMC) to invest in unlisted or privately owned Real Estate Investment Scheme (REIT) shares on behalf of an equity-based collective investment scheme (CIS).

The SECP issued circular I9 of 2021 on Friday on the issue of investing in unregistered or privately located REIT program shares of share-based collective investment schemes.

In exercising the powers conferred by Section 282 B(3) of the 1984 Corporate Ordinance, promulgated by Ordinance 55 (15) of the Non-Banking Financial Companies and Listed Entities Regulations 2008 (“the Regulations”), Asset Management Companies (AMC ) to invest on behalf of a share-based collective investment scheme (CIS), i.e. shares, asset allocation, balanced and indexing schemes, in a non-linked or private REIT fund unit listed on an exchange within a period of three years after its financial settlement as provided for in the Regulations 5 (3) REIT Regulation, 2015.

A prerequisite for this is that UCI must enter into exposure in a registered or privately-owned REIT program unit up to a maximum of 5 percent of UCI’s net assets or of the net assets of that REIT program, whichever is lower, provided that the Company (industry) complies with the value the group exposure limit specified in the ordinance.

Prior to investment, AMC is responsible for ensuring the correct evaluation and valuation of investments in non-listed or private shares of the REIT Program in order to calculate net asset value and for the establishment of a UCI mechanism to leave REIT.

This Circular Letter is a continuation of Circular Letter 19 of 2015 dated 15 May 2015, accompanied by SECP.

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