Business Daily from THE HINDU group of publications
Tuesday, Jun 27, 2006
Business Daily from THE HINDU group of publications Tuesday, Jun 27, 2006 |
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Regulatory Bodies & Rulings Industry & Economy - Real Estate & Construction Markets - Mutual Funds Our Bureau
Shot in the arm Exemption for venture capital funds from IPO lock-in `Tradability issues remain a concern' Funds required to appoint custodian
Mumbai , June 26 The Securities and Exchange Board of India on Monday approved guidelines for real estate mutual funds, allowing them to invest directly in real estate properties in India. These funds would initially be close-ended schemes. Their units would be compulsorily listed on the stock exchanges and NAVs of the schemes would be declared daily.
Investment norms
Apart from real estate properties in India, the schemes can invest in mortgage (housing lease) backed securities, and equity shares/bonds/debentures of listed and unlisted companies dealing in properties and undertake property development, the SEBI said after its board meeting today. The board also decided to exempt venture capital funds and foreign venture capital investors from the lock-in period during an IPO only if they hold shares in that company for a period of at least one year at the time of filing draft prospectus with the SEBI. This would help to ensure that only those who invest in the company with a long-term perspective would be allowed to get the benefit of exemption from requirement of lock-in period. Mr Ashwin Ramesh, Director, Primary Real Estate Advisors of Quantum Real Estate Funds, said: "We will consider real estate since we have been raising funds overseas to invest in the Indian real estate market. However, we are not sure how convenient it would be to list NAVs every day." Mr Dhirendra Kumar, CEO and Managing Director of Value Research, said: "Tradability issues would be a concern since the underlying market still has to evolve."
Custodian of securities
The funds would be required to appoint a custodian who has been granted a certificate of registration to carry on the business of custodian of securities by the board. Mr A.P. Kurien, Chairman of AMFI, said: "This is a welcome development for the mutual fund industry which enables common investors to participate in real estate."
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