FII Portfolio Under Lens

March 22, 2007	(1 votes, average: 1 out of 5)  Loading ...
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The finance ministry has decided that all pre-IPO placements to Foreign Institutional Investors (FII) by real estate players would be subject to three year lock-in, minimum capitalization of $5 million and development of at least 10 hectares of land. This is to be done according to the rules and regulations applicable to the sector.

The ministry has sent a detailed proposal for the review of the Cabinet Committee on Economic Affairs (CCEA). The move may slow down the pace of FII investment that the realty companies are boasting of. The FinMin does not seem to be agreeing with the stand of Department of Industrial Policy and Promotion (DIPP) and Securities and Exchange Board of India (Sebi) regarding consideration of pre-IPO placements as portfolio investment.

DIPP wants FII investment to flow in through the portfolio management scheme. Near about 50% of the foreign investments flowed into real estate in India in 2006 was through the private players.

According to RBI, the pre-IPO FII investments cannot be seen as portfolio investment. Earlier, FII placements were regarded as broker intermediate transactions on the stock exchange, which lead them to be considered as a part of portfolio flows. However, the things have much changed since regulations have been relaxed thereby enabling FIIs to make investments in unlisted securities and private placements, adds RBI.

News Published Under:   Real Estate India |

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