Investing in infra projects may become reality soon

Nifty BSE | NSE 13/02/12 Are Mutual Funds betting on Nifty?

You may soon be able to invest in a flyover next to your house. That's if Sebi 's committee on infrastructure funds has its way reports CNBC-TV18.

 

 

It might just be possible to trade an infrastructure project on Dalal Street. Sebi committee on dedicated infrastructure funds has proposed launching 7-year close-ended schemes investing in large infrastructure projects in the country. So far mutual funds were investing in just stocks of infrastructure companies

 

It's good news for mutual funds that have so far not been permitted to invest in unlisted paper. Infact if the proposals come through, then mutual funds could well own a 100% of such projects. The idea to have such funds listed comes because the gestation period of such projects is high.

 

But many retail investors do not want to be locked in for such long periods listing will make these funds a liquid asset, one that investors can easily move in and out of.

 

But that listing will come only 18 to 24 months after the launch of the fund.  There's also a Rs 1-lakh tax exemption for retail investors that sweetens the deal. That's over and above the existing limit under sec 80c. These dedicated infrastructure funds will be launched by Indian asset managers and other domestic institutions like insurance companies and employee provident funds can buy their schemes.

 

All this, 6 months after the finance minister proposed setting up these funds to meet India's large infrastructure funding requirements. But as of now, it's just a proposal that's up for public comment. Sebi yet has to give a final go-ahead to these funds.