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Rediff News  All News  » Business » CCEA clears $500 mn GVK proposal

CCEA clears $500 mn GVK proposal

April 20, 2007 11:42 IST

Foreign Direct Investments of $500 million will come into the country with the Cabinet Committee on Economic Affairs clearing a proposal of the GVK Power and Infrastructure Ltd to issue over 78 lakh shares to non resident Indians shareholders of its sister concern GVK Industries Ltd.

GVKPIL will issue and allot 78,58,388 equity shares of Rs 10 each to non-resident shareholders of GVKIL amounting to 7.63 per cent of the post issue paid up equity share capital of GVKPIL, an official after the CCEA meeting.

This would be in consideration for transfer of NRI shareholders respective shares in GVKIL to GVKPIL in the ratio of 40:3, under which NRI shareholders would be given three shares of GVKPIL for every 40 shares they hold in GVKIL. An FDI amount to Rs 2,250 crore  (Rs 22.5 billion) will be received in the country following the issue and allotment of shares, she said.

Meanwhile, the Cabinet Committee on Economic Affairs also permitted foreign investments up to $250 million in projects of DHFL Venture Capital Fund on Thursday. The money will be invested in Class B units of Dream II scheme of the Mumbai-based venture capital fund. DHFL Venture Capital Fund India Pvt Ltd, whose principal shareholders include Dewan Housing Finance Corporation Ltd, will manage the Dream II scheme.

Foreign investors could make investments through one or more special purpose companies or their subsidiaries, an official release issued after the CCEA meeting said.

The approval would be subject to compliance of venture capital regulations, Press Note 9 of 99 series for downstream investment and Press Note 2 of 2005 series for construction development activities, it said. Dream II scheme proposes to issue four classes of units.

While Class A units will be issued to only domestic investors Class B units will be offered to offshore investors.

BS Reporter in New Delhi