SEBI announces IPP norms for stake sale

Capital market regulator Securities Exchange Board of India (SEBI) on Wednesday notified new rules for private placement of shares to institutional investors through a new window called the Institutional Placement Programme (IPP).

Capital market regulator Securities Exchange Board of India (SEBI) on Wednesday notified new rules for private placement of shares to institutional investors through a new window called the Institutional Placement Programme (IPP).

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This is likely to kickstart the government’s stalled disinvestment programme, including three big-ticket stake sales in ONGC, SAIL and BHEL, which can raise a combined Rs 22,000 crore for the government.

IPP is similar to the existing qualified institutional placement (QIP) route, but is more transparent and broad-based.

The IPP method can be used to increase public holding by 10% and a quarter of the offer or 25% should be reserved for mutual funds and insurance companies. Issuers will have to announce an indicative floor price or price band at least one day before the opening of the offer. Such an issue would remain open for a maximum of two days.

“The aggregate of all the tranches of institutional placement programme made by the eligible seller shall not result in increase in public shareholding by more than 10%,” SEBI said in its notification.