The Securities and Exchange Board of India (SEBI) has reduced the cooling-off period for offer-for-sale (OFS) transactions involving illiquid privately listed Infrastructure Investment Trusts (InvITs) from 12 weeks to eight weeks. The new rule, announced through a circular on November 2, 2026, takes effect immediately and is intended to make it easier for investors and sponsors to conduct transactions involving these infrastructure investment vehicles.
The change addresses the relatively limited liquidity of privately listed InvITs, where large trading lots restrict participation and reduce trading volumes. SEBI has retained longer cooling-off periods for other categories of securities based on their liquidity, making the adjustment a targeted regulatory relaxation rather than a change to the entire OFS framework.
Key Highlights
- SEBI reduced the cooling-off period for illiquid privately listed InvITs from 12 weeks to eight weeks.
- The revised requirement applies to transactions before and after an OFS.
- The circular was issued on November 2, 2026, and became effective immediately.
- Privately listed InvITs typically have a trading lot size of ₹25 lakh, limiting participation.
- Trading is largely concentrated among institutional investors, companies and high-net-worth individuals.
- The cooling-off periods for most liquid and liquid securities remain unchanged at two and four weeks, respectively.
What Has SEBI Changed?
Under the earlier framework, the cooling-off period for transactions involving securities offered through an OFS depended on their liquidity.
The restriction covered purchases or sales by relevant shareholders before and after an offer. For illiquid securities, the applicable period was 12 weeks.
SEBI has now reduced this period to eight weeks specifically for illiquid privately listed InvITs.
The regulator said the decision was based on feedback received from market participants and was intended to facilitate ease of doing business.
| Security category | Earlier cooling-off period | Revised cooling-off period |
|---|---|---|
| Most liquid securities | 2 weeks | 2 weeks |
| Liquid securities | 4 weeks | 4 weeks |
| Illiquid securities generally | 12 weeks | 12 weeks |
| Illiquid privately listed InvITs | 12 weeks | 8 weeks |
Source: SEBI’s November 2, 2026 circular. The eight-week period is a specific relaxation for illiquid privately listed InvITs.
The revised eight-week requirement is expressed as a period around the OFS transaction. It therefore covers the relevant purchase or sale activity before and after the offer, rather than simply setting a deadline for launching an OFS.
Why Did SEBI Reduce the Cooling-Off Period?
The main reason is the structural liquidity constraint faced by privately listed InvITs.
Unlike widely traded listed securities, these investment vehicles generally have large minimum trading lots. SEBI’s consultation documents highlighted a trading lot size of ₹25 lakh, which makes participation difficult for smaller investors.
As a result, the market for these units is largely restricted to institutional investors, body corporates and high-net-worth individuals.
The limited investor base leads to relatively thin trading volumes. Applying the same 12-week cooling-off restriction used for other illiquid securities can create additional difficulties for sponsors and unitholders seeking to sell their holdings through an OFS.
SEBI reviewed the issue following representations from market participants and recommendations from its Hybrid Securities Advisory Committee.
The regulator concluded that reducing the period to eight weeks would provide additional flexibility while retaining restrictions around the sale process.
Understanding Offer for Sale in InvITs
An Offer for Sale is a mechanism through which existing shareholders or unitholders sell their holdings through a stock exchange.
Unlike a fresh issue, an OFS does not raise new capital for the company or investment trust. Instead, the proceeds go to the investors selling their units.
In the case of InvITs, sponsors, sponsor-group entities and other eligible unitholders can use the OFS mechanism to sell units of listed infrastructure investment trusts, subject to SEBI’s applicable framework.
For example, a sponsor holding units in an infrastructure investment trust may want to reduce its ownership or monetise part of its investment.
The OFS mechanism provides an organised route for such a transaction. However, cooling-off requirements restrict certain purchases and sales around the offer to address concerns about trading activity before and after the transaction.
Reducing the applicable period gives eligible participants more flexibility in planning these transactions.
What Are Infrastructure Investment Trusts?
Infrastructure Investment Trusts, commonly known as InvITs, are investment vehicles that allow investors to participate in income-generating infrastructure assets.
They can hold assets such as:
- National highways and toll roads
- Power transmission networks
- Renewable energy infrastructure
- Gas pipelines
- Telecommunications infrastructure
InvITs pool investments and use the proceeds to acquire, operate or manage infrastructure assets. Revenue generated through these assets can support distributions to unitholders, subject to the trust’s financial performance and regulatory requirements.
They provide infrastructure developers with a route to monetise operational assets and recycle capital into new projects.
For investors, InvITs offer exposure to infrastructure-related cash flows without requiring direct ownership or management of roads, power networks or other physical assets.
How the Change Could Affect Sponsors and Investors
The revised rule could make it easier for sponsors and existing unitholders of eligible InvITs to plan stake sales.
A shorter cooling-off period can reduce the time between relevant transactions and an OFS, improving flexibility when participants are planning capital allocation or ownership changes.
It may also help infrastructure developers recycle capital more efficiently. Selling part of an existing investment can provide funds for new infrastructure projects or reduce financial commitments.
However, the relaxation does not guarantee higher trading volumes or better prices. Privately listed InvITs will continue to face structural liquidity constraints because of their large trading lots and limited investor participation.
Investors should also distinguish between regulatory flexibility and investment quality. The shorter cooling-off period does not change the underlying infrastructure assets, distribution obligations or financial risks associated with an InvIT.
How the New Rule Fits SEBI’s Broader InvIT Reforms
The November 2 circular is part of SEBI’s wider effort to improve the regulatory framework for REITs and InvITs.
In August 2026, the regulator issued a consultation paper proposing several changes intended to improve ease of doing business in these investment structures.
The proposals included allowing certain investments in third-party under-construction projects without a controlling interest, clarifying unitholder approval requirements and addressing inconsistencies in the treatment of remote common infrastructure under REIT regulations.
The consultation also proposed reducing the cooling-off period for illiquid privately placed InvITs from 12 weeks to eight weeks.
The November circular formalises that particular change.
The broader reform agenda reflects SEBI’s attempt to balance investor protection with the need to make infrastructure investment vehicles more flexible and efficient.
The Bigger Picture
India requires substantial long-term investment in highways, power transmission, renewable energy and other infrastructure. InvITs can help mobilise institutional capital by allowing investors to participate in operating infrastructure assets while enabling developers to recycle capital.
SEBI’s decision addresses one operational restriction affecting a relatively specialised part of this market. Although the change is narrow, it may make ownership transfers and stake monetisation easier for eligible participants.
The broader impact will depend on whether the regulatory flexibility encourages more transactions and improves participation without weakening safeguards around market conduct.
Looking Ahead
The revised eight-week cooling-off period is effective immediately, and market participants will now need to apply the updated requirement when planning eligible OFS transactions involving illiquid privately listed InvITs. Stock exchanges and relevant market intermediaries will be responsible for implementing the revised framework.
Investors and infrastructure developers will watch whether the change leads to greater transaction activity in privately listed InvITs. The measure does not remove liquidity constraints or change the risks of infrastructure investments, but it gives eligible participants a shorter restricted period when planning sales through the OFS mechanism.
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