Capital markets regulator Securities and Exchange Board of India (SEBI) is likely to announce a host of measures on Thursday including guidelines for electronic initial public offering (e-IPO), incentives for mutual funds and a possible "safety net mechanism" for retail investors subscribing to IPOs.
The SEBI board is likely to approve a mandatory "safety net mechanism" that will offer retail investors the option of a guaranteed price if the share price falls below a certain level within a specified period of the issued getting listed on the stock exchange.
"Such buyback or safety net arrangements shall be made available only to all original resident individual allottees limited up to a maximum of 1000 shares per allottee and the offer will be kept open for a period of 6 months from the day the issue was listed on exchanges," said a source on the condition of anonymity.The move is aimed at boosting investor sentiment as policy makers struggle to turnaround the domestic economy.
"The guidelines of an e-IPO are expected to be cleared in board meeting on Thursday and the overall structure would remain more or less the same like that of a normal IPO," said another source on the condition of anonymity.
An e-IPO will allow online participation of investors in a public offering through an encrypted software, without any physical paperwork. It will hasten the public offering process and bring down costs significantly.
"The secondary market structure will be utilised for extending the reach of the IPO," said the source.