SSE Issues Rules for Additional Offering of Infrastructure REITs to Support Revitalization of Assets, Expand Effective Investments

31 May 2022
To implement the decisions and arrangements of the CPC Central Committee and the State Council, in accordance with the work requirements of the Opinions of the General Office of the State Council on Further Revitalizing Existing Assets and Expanding Effective Investments, and under the guidance of the China Securities Regulatory Commission (CSRC), the Shanghai Stock Exchange (SSE) issued and implemented on May 31 the Guidelines of Shanghai Stock Exchange for the Application of the Rules for the Publicly Offered Infrastructure Real Estate Investment Trusts (REITs) No. 3 - New Acquisition of Infrastructure Projects (for Trial Implementation) (hereinafter referred to as the Additional Offering Rules). The introduction of the Additional Offering Rules is an important measure by the SSE to promote the steady and healthy development of the REITs market, and further leverage the long-term strategic value and sustainable development capabilities of REITs products as a platform for listing of assets.

The Additional Offering Rules regulate and guide the key issues, such as new acquisition of infrastructure projects in the duration of the REIT, the whole process of newly acquiring infrastructure projects and the additional offering. First, the rules specify the conditions for new acquisition of infrastructure projects, set out principled requirements for application conditions, and specify the requirements for infrastructure funds, major participating institutions, infrastructure projects, and funding sources respectively. Second, the rules make the procedural arrangements for new acquisition of infrastructure projects, regulate due diligence and related transactions, and stipulate the reference to the standards and requirements for initial offering in reviewing applications for the changes of fund products and the infrastructure asset-backed securities. Third, the rules clarify the management of information disclosure, provide for the confidentiality responsibilities of the participants, and adhere to the principles of prudent trading suspension and phased disclosure for transactions. Fourth, the rules stipulate the relevant arrangements for the additional offering. Three offering modes can be adopted in the expansion of the infrastructure REITs, namely, allotment to the existing holders, public additional offering and targeted additional offering. Meanwhile, the conditions and requirements for each offering mode are to be specified.

From April 15 to 30, 2022, when the SSE solicited public opinions on the Additional Offering Rules, the SSE organized multiple symposiums on the rules to address the concerns of market players and collect and summarize opinions and suggestions. On the whole, the market participants responded positively and extensively, basically agreeing with the relevant provisions, and at the same time putting forward specific suggestions on revision. Attaching great importance to the feedback of all parties in the market, the SSE has carefully sorted out and studied the comments collected, fully absorbed valuable opinions, mainly including more solid work on asset valuation, canceling restrictions on the proportion of allotments to existing holders, and expanding the scope of investors for targeted offering, and made improvements on the circumstances of hiring financial advisors, the requirements for application documents, the definition of operation time, the circumstances of offering failure, and the requirements for strategic investors for targeted additional offering respectively.

Going forward, under the unified leadership of the CSRC, the SSE will fully stimulate the motivation of market entities for participation, support well-functioning REITs in growing better and stronger through the additional offering mechanism, and rationalize the incentive mechanism. At the same time, the SSE will make every effort to ensure the smooth and orderly landing of mature projects for additional offering, and smooth the whole business process of REITs so as form a demonstrative effect and contribute to the stabilization of the macro economy.

Attachment: Notice of Issuing the Guidelines of Shanghai Stock Exchange for the Application of the Rules for the Publicly Offered Infrastructure Real Estate Investment Trusts (REITs) No. 3 - New Acquisition of Infrastructure Projects (for Trial Implementation)