FIIs can invest in IPOs of real estate companies
Government has said there are no restrictions on FIIs to invest in the IPO of DLF, Parsvnath and other real estate companies.india Updated: May 08, 2006 17:12 IST
Government has said that there are no restrictions on Foreign Institutional Investors to invest in the initial public offers of DLF, Parsvnath and other real estate companies.
The government's response comes in the wake of DLF and Parsvanath seeking clarification from Industry Ministry on whether or not FIIs were permitted to make investments.
The Ministry responding to their letters has written that guidelines will be applicable only on Foreign Direct Investment and not on FII, official sources said.
As per current norms for the Indian real estate sector, 100 per cent FDI is allowed with certain conditions.
The minimum area to be developed for each project is 25 acres and minimum capital investment for wholly-owned subsidiaries is $10 million, which is $5million for joint ventures.
The original investment can be fully repatriated after three years.
Though the FIIs can invest in the IPO, but if they make any investments in these companies pre-issue it will attract FDI guidelines, which these companies will have to adhere to.
While DLF group says it hopes to raise more than Rs 10,500 crore from the largest ever public issue in June, Parsvanath is expected to raise about Rs 1,700 crore.