The Securities and Exchange Board of India has lowered the cooling-off period for offer-for-sale (OFS) transactions in privately listed, illiquid Infrastructure Investment Trusts (InvITs) from 12 weeks to 8 weeks. This move aims to improve portfolio flexibility for large investors, though trading volumes in these instruments remain structurally constrained by high minimum investment requirements.
The Securities and Exchange Board of India (SEBI) has amended the regulatory framework for privately listed Infrastructure Investment Trusts (InvITs), reducing the cooling-off period for offer-for-sale (OFS) transactions from 12 weeks to eight weeks. This change, effective immediately as of November 2, 2026, applies to instruments categorized as illiquid.
The cooling-off period is a regulatory restriction that prohibits promoters or major shareholders from buying or selling units during a specific window before and after an OFS. By shortening this timeframe, the regulator aims to assist institutional investors and high-net-worth individuals in managing their portfolios with greater agility. Previously, the 12-week lock-in often restricted these investors from adjusting their holdings, potentially trapping capital in trusts that already suffer from low market participation.
Privately listed InvITs often struggle with low trading volumes because of high entry barriers. These instruments typically require significant minimum investment amounts—often reaching into lakhs of rupees—which effectively limits the pool of participants to institutional entities, large corporations, and wealthy individuals. Because the number of active buyers and sellers is naturally low, these trusts are often classified as illiquid under market standards.
While the reduction in the waiting period provides more flexibility, it does not address the underlying structural barriers causing the illiquidity. The high minimum lot sizes remain in place, meaning that the fundamental issue of low market depth persists. Investors should note that even with the shorter cooling-off period, these instruments may continue to see price volatility, especially following an OFS.
In thin markets, a concentrated sell-off can cause significant price swings, regardless of the regulatory timeframe for trading. Market participants are advised to consider that while the rule change facilitates easier exit and rebalancing, the core challenge of liquidity—finding a buyer or seller at a fair price—remains a factor for these assets. The impact of this decision will likely be seen in how institutional holders manage their positions during future OFS events, with the shorter timeline potentially encouraging more frequent capital rotation.