The Hindu Business Line : TCS public offer: SEBI says no to participatory notes

BOOK running lead managers are not allowed to issue participatory notes on behalf of their clients for the Tata Consultancy Services' IPO. The Securities and Exchange Board of India has turned down the lead managers' request for the same.

Participatory notes are used as a route for foreign funds that are not registered to invest in India to participate in the Indian stock markets. This is usually used by hedge funds and others who are reluctant to fulfil the necessary disclosures and regulatory procedures that are required to invest in Indian markets.

JM Morgan Stanley, DSP Merrill Lynch and JP Morgan are the lead managers for the TCS IPO.

As the allotment to qualified institutional buyers (QIBs) would be done on a discretionary basis, there are concerns that if allowed, lead managers may take advantage of this to issue allotments to their favoured clients. Denying them permission to issue participatory notes to their associates for the deal eliminates this risk. The permission to merchant bankers to issue participatory notes is given on a case-to-case basis.

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TCS public offer: SEBI says no to participatory notes