SEBI proposes Infrastructural Investment via FVCI Route
As more and more foreign real estate companies and investors are looking to enter the Indian markets owing to the relaxation in the FDI norms, market regulator SEBI has proposed allowing of Foreign Venture Capital Investors (FVCIs) in Core Investment Companies (CICs).
SEBI has floated its proposal to allow investment in real estate projects under Foreign Venture Capital Investors (FVCIs) inviting comments and other proposals from the general public. Once SEBI receives the feedback from the public, the market watchdog would place a draft of final norms required for foreign companies to invest in the Indian real estate companies. SEBI said the proposal is based on the fact that CICs are essentially holding companies and do not engage in financing activity similar to other NBFCs. The proposal to allow investment by FVCIs in CICs in infrastructure companies has already been given a go ahead by the central Government and the Reserve Bank of India. Once SEBI finalizes the norms on the proposal, it can pave way for infusion of funds into the infrastructure sector.
Releasing its initial concept paper, SEBI said that the proposal is aimed at removing any hindrance for investment in the infrastructure sector through the FVCI route. Public comments have been sought till November 15 after which SEI would finalize the draft of norms for the investment under FVCIs. The new FDI rules have reduced the minimum built up area requirement to 20,000 square meters from 50,000 square meters while the minimum capital requirement has been reduced from $10 million to $5 million respectively.
Both real estate and market experts have given the proposal thumbs up believing that FCVI is the way to handle real estate investments and once approved the inflow of foreign funds can also spillover to other segments which can boost the Indian economy in the near future.
Source: VC Circle
CICs, Core Investment Companies, FDI rules, Foreign Venture Capital Investors, FVCI, FVCIs, Reserve Bank of India, SEBI, Securities and Exchange Board of India
