The Hindu Business Line : Cos may be allowed to raise funds by regulated placement of shares with QIBs

AS an alternative to GDR and FCCB (foreign currency convertible bonds) routes, listed Indian companies may be allowed to raise funds from the domestic market by a regulated placement of shares with qualified institutional investors (QIBs).

This has been suggested by a committee set up by capital market regulator SEBI, in its report released today. "It appears that the GDR/FCCB route is preferred by listed companies mainly on account of its time and cost effectiveness. While on the one hand this is resulting in a gradual export of the domestic market, on the other hand, it is impacting the depth of the domestic markets," said the SEBI report.

As the placement would be to a set of informed investors, the disclosures and procedural stipulations would be relatively less as compared to the public issue process. This mechanism would complement the existing public issue and preferential issue guidelines, the report said.

The proposed mechanism will be applicable only to listed companies and the placement of shares by them would be treated as a private placement (under the Companies Act provision of having not more than 49 investors).

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