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SEBI releases discussion paper on revisiting the capital raising process

09 Jan 2015 Evaluate

In a move aimed at boosting fund raising from the market and reducing the timeline for listing of shares, the Securities and Exchange Board of India (SEBI), in its discussion paper on  ‘Revisiting the capital raising process’ proposed e-IPO norms, where investors can bid for shares through Internet and eventually on mobiles.

The market regulator is also planning to tweak rules that will help companies with market capitalization of Rs 250 crore or more to fast-track rights issues and follow-on public offers (FPOs) subject to certain conditions. Under the current rules, companies must have a public market cap of at least Rs 3,000 crore. Additionally, it has also proposed to drastically cut the timeline for listing of shares within 2-3 days of the IPO, as against 12 days presently.

Besides, SEBI has proposed a fast-track route for already listed entities for raising funds through follow-on public offers (FPOs) or rights offers, where funds can be raised from existing shareholders.

The regulator felt the need of reviewing capital-raising process from the markets as it had been observed that listed issuers preferred private placements routes, including qualified institutional placement, over other offers such as FPOs or rights issues, mainly on account of shorter time frame and lower cost involved.

Through the proposals, Sebi wants to simplify the IPO process, lower their costs and help companies to reach more retail investors in small towns. In order to put in place final norms for e-IPO and for fast-track issuances, SEBI has invited public comments till January 30, 2015.

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