Sebi on Monday cleared the real estate mutual fund guidelines, perhaps offering investors a safe parking slot for their monies.
MUMBAI: Tired of equity and debt? There’s relief at hand, in the form of a new asset class.
The Securities and Exchange Board of India on Monday cleared the real estate mutual fund guidelines, perhaps offering investors a safe parking slot for their monies.
“This is good for retail investors. It throws open the doors for an asset class other than equity and debt. If the investor makes a return of 8-12% annually, it would mean that in 5-6 years, he can double his money,” said Sameer Kamdar, national head of mutual funds at Mata Securities.
“Participation by retail investors, which was restricted due to the high price of properties and the hassles involved in direct investment will now be a thing of the past,” Kamdar added.
The regulator said real estate mutual funds in India would be initially closed-ended with their units listed on the stock exchanges.
The funds can directly invest only in real estate properties in India. They will be required to invest a minimum of 35% of their in real estate properties. The balance can go into mortgage-backed securities, shares, bonds or debentures of companies dealing in properties and property development, and in other securities.
“Other securities would mean debt and money market instruments. Real estate mutual funds cannot invest in the shares of companies that do not deal in property or property development. They would need to invest a minimum of 35% of their corpus in real estate properties,” said a Sebi official. The Sebi board has approved the guidelines.
The board also decided that venture capital funds and foreign venture capital investors would be exempt from lock-in requirements during the IPO, if they have been holding the shares of the company for at least a year when the company files its draft prospectus.
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