The company, which had filed preliminary papers with Sebi in April seeking approval to float an initial share-sale, got the regulator's "observations" on July 6, as per the latest update with the markets watchdog.
The approval paves way for the second biggest IPO in the real estate sector after DLF which had raised close to Rs 9,200 crore in 2007 though it initial share-sale offer.
Apart from Lodha Developers, the regulator has given clearance to Shakun Polymers and Dinesh Engineers to float initial share-sales.
Observations from the Securities and Exchange Board of India (Sebi) are necessary for any company to launch public issues like rights issue, initial public offer (IPO) and follow-on public offer (FPO).
As per the draft papers filed with Sebi, Lodha Developers plans to issue fresh shares worth Rs 3,750 crore besides an offer for sale of 1.8 crore shares by the promoters.
Also, it aims to raise about Rs 750 crore out of the proposed issue through a pre-IPO placement of 95 lakh fresh shares.
According to merchant banking sources, the company is looking to raise about Rs 5,500 crore through IPO, including pre-placement of shares.
Earlier, the company had kept the realty firm's proposed IPO in abeyance "for examination of past violations. However, the regulator had not clarified about it further.
Privately-held Lodha Group is developing around 40 million sq ft area and has 31 ongoing projects in London, Mumbai Metropolitan Region, Pune, Bengaluru and Hyderabad. It has a land bank of 350 million sq ft for future development.
Prior to this, the company had filed draft papers in September 2009 to raise about Rs 2,800 crore. It had received Sebi's nod in January 2010, but later shelved its plan to launch the IPO due to bad market conditions post the global financial crisis.