Companies can now fast-track their follow-on public offerings, a way listed companies raise cash from stock exchanges. The Securities and Exchange Board of India (Sebi) has made some recommendations that can now help these companies go to the market faster.
Investors investing in a Companies going for fast-track clearance though have to forego the bidding process for book building for retail investors, who will be offered the issue at the floor price. Only qualified institutional buyers (QIB),
large investors with a lot of funds, will be allowed to bid.
“The issues can have a pure auction, but only for the QIB,” said CB Bhave, chairman, Sebi.
The regulator has also made a series of recommendations to ensure large listed companies manage to state their accounts properly and the necessary transparency is achieved. These companies will be allowed to report their numbers in the International Finance Reporting Standards format.
“The SEBI clarification on Follow on Public Offers (FPO) does not have much for retail investors. Retail investors would get to apply for the issues at the floor level while other investors, such as qualified institutional buyers (QIBs) can bid for any price over the floor price,” said Amit Majumdar, Executive Director and Chief Strategy Officer of Angel Trading.
Sebi has also laid out guidelines clearing the way for existing stock exchanges to trade in stocks of Small and Medium Enterprises (SME). Ruling out setting up of a separate exchange, chairman CB Bhave said that the regulatory authority would rather the existing exchanges use their platforms to trade in these shares.
Companies allowed to trade on this exchange would have to provide a paid-up capital of between Rs 25 crore and Rs 10 crore.