Firms can give 10% discount to retail investors in IPOs
The Securities and Exchange Board of India (Sebi) on Thursday allowed companies to offer up to 10 per cent discount to retail investors in initial public offers. The discount was so far restricted to follow-on offers.
Sebi has also redefined the term `retail investor' as one who makes application or bids in a public issue for value not exceeding Rs 1,00,000 — up from the existing Rs 50,000 and above.
The new norms have made submission of PAN (Permanent Account Number) mandatory for all share applications, removing the existing rule of Rs 50,000 and above.
On discount to issue price, the Sebi statement said: "Companies making public issues are permitted to issue securities to retail individual investors/retail individual shareholders at a discount price, provided that such discount does not exceed 10 percent of the price at which securities are issued to other categories of public."
Fast-track issuances
In yet another major change in the share issuance norms, the regulator allowed big corporate houses to raise funds through a fast track route. In the first phase, about 30 companies will become eligible for fast-track issuances of rights and follow-on offers.
The companies will be decided on the basis of a minimum market capitalization of public holding, trading turnover on the stock exchanges, track record of compliance with listing requirements and investor grievance redressal.
"This is a welcome move. Big companies are very familiar with investors and the developments in these corporate houses are also widely reported in newspapers. These companies will be able to meet their immediate funding requirements without waiting for a formal regulatory clearance," said an investment banker.
This is a first-of-its-kind procedure for any emerging market and only the second country (after US) to have a file-and-raise money plan.
The fast-track issuance for rights and FPOs is largely based on the well-known seasoned issuers (WKSIs) model followed by the Securities and Exchange Commission of the US.
The Securities and Exchange Board of India (Sebi) on Thursday allowed companies to offer up to 10 per cent discount to retail investors in initial public offers. The discount was so far restricted to follow-on offers.
Sebi has also redefined the term `retail investor' as one who makes application or bids in a public issue for value not exceeding Rs 1,00,000 — up from the existing Rs 50,000 and above.
The new norms have made submission of PAN (Permanent Account Number) mandatory for all share applications, removing the existing rule of Rs 50,000 and above.
On discount to issue price, the Sebi statement said: "Companies making public issues are permitted to issue securities to retail individual investors/retail individual shareholders at a discount price, provided that such discount does not exceed 10 percent of the price at which securities are issued to other categories of public."
Fast-track issuances
In yet another major change in the share issuance norms, the regulator allowed big corporate houses to raise funds through a fast track route. In the first phase, about 30 companies will become eligible for fast-track issuances of rights and follow-on offers.
The companies will be decided on the basis of a minimum market capitalization of public holding, trading turnover on the stock exchanges, track record of compliance with listing requirements and investor grievance redressal.
"This is a welcome move. Big companies are very familiar with investors and the developments in these corporate houses are also widely reported in newspapers. These companies will be able to meet their immediate funding requirements without waiting for a formal regulatory clearance," said an investment banker.
This is a first-of-its-kind procedure for any emerging market and only the second country (after US) to have a file-and-raise money plan.
The fast-track issuance for rights and FPOs is largely based on the well-known seasoned issuers (WKSIs) model followed by the Securities and Exchange Commission of the US.
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