To provide fast-track route for share sales by PSUs
To boost fund raising from markets, the Securities and Exchange Board of India, on Thursday, proposed e-IPO norms, where investors can bid for shares through Internet and eventually on mobiles, while already listed public sector undertakings (PSUs) will be provided a ‘fast-track’ route for share sales to meet the disinvestment targets.
For already listed companies as well, the market regulator has proposed a fast-track route for raising of funds through FPOs (follow-on public offers) or rights offers (where funds can be raised from existing shareholders).
Under the new norms, SEBI has proposed to drastically cut the timeline for listing of shares within 2-3 days of the IPO, as against 12 days currently.
The fast-track route of raising capital has been proposed for companies having public shareholding market valuation of as low as Rs.250 crore, as against Rs.3,000 crore at present. The public sector entities can tap the ‘fast-track’ route even without complying to this minimum average market value limit, provided they meet other conditions, SEBI said. Under the ‘fast-track’ route, a listed company would not be required to file any draft offer document for its FPO or rights issue and it can proceed with the fund-raising programme without necessarily getting ‘observations’ from SEBI.
SEBI has invited public comments till January 30, after which it would put in place final norms for e-IPO as also for fast-track issuances.
Simplifying process
The proposed moves are part of efforts to simplify the process of IPOs, lowering their costs and helping companies reach more retail investors in small towns.
Initially, investors would be able to place bids through Internet and by using broker terminals across the country, as against the current practice of filling long paper forms.
Mobile app for making bids
A framework for use of mobile applications for making bids in public issues can also be put in place for implementation in future, SEBI said.
Investors would also get SMS/e-mail alert for allotment under the IPO, similar to alerts being sent to investors for secondary market transactions.
Further, on account of reduction in printing of application forms, the overall cost of public issues will also come down.
SEBI said that these proposals may be used for debt issues as well. However, to make this mechanism applicable, suitable amendments may be required under the SEBI (Issue and Listing of Debt Securities) Regulations, 2008.
