SEBI Tightens IPO Norms for Real Estate Companies

March 23, 2007	(Be the first to rate this story!)  Loading ...
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The stock market regulator has tightened the disclosure norms for real estate companies raising money through shares thereby putting an end to unsubstantiated claims regarding the extent and valuation of these companies’ land banks.

The Securities and Exchange Board of India (Sebi) has also made it compulsory for all initial public offering (IPO) to be rated by the agencies and the grading of IPO will come into effect immediately.

All real estate companies raising money through stocks will require disclosing the details about their land banks. In addition, they will have to submit the ownership status or an agreement to purchase the land.

These companies must project the valuation of land bank on the basis of the land’s current value irrespective of the future appreciations, says Sebi Chairman M. Damodaran.

The decision taken by the regulators holds significant importance, says Sameer Kamdar, country head of Mata Securities India Pvt. Ltd.

Real estate companies are to raise Rs 16,000 crore in 2007 through IPOs. And, near about 35% of the Rs. 45,000 crore was likely to be raised through about new listings. Taking a walk back in the year 2006, around Rs. 20,000 crore was raised from the public by 73 companies. Of this, Rs 4,000 crore was believed to be raised by the real estate companies.

Property developers who have already filed permission to launch IPOs may be asked to submit substantial details before giving them the final nod. The shift is believed to bring transparency in the fragmented real estate market in India.

News Published Under:   Real Estate India |

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