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Our Bureau

Mumbai, Feb. 2 Market participants welcomed markets regulator SEBI’s decision to amend takeover regulations for calculation of open offer price as it is in “the better interest of the long term participants”. There were a lot of reservations though on the part of legal experts.

SEBI said that it will amend its takeover regulations to allow a transparent process for arriving at an open offer price in special cases like that of Satyam Computer.

“With this move now, the open offer price will be valued at the right price and not as it was before the confession of the Satyam Chairman,” said Mr C.J. George, Managing Director, Geojit Financial Services.

“Even though with the new amendments, the open offer price might be much lesser than the 26-week average (calculated under current regulations), it is in the best interest of those who want to stay invested longer,” Ms Anita Gandhi, Head of Institutional Business at Arihant Capital Market, said.

The SEBI Chairman’s statement that the 26-week market price of Satyam took into account numbers that have now been disowned by its own auditors, did not go down well among legal circles.

“If numbers are assumed to be a major mover of the market, the re-pricing of an open offer will essentially depend upon the current market. In the absence of any reliable numbers even now for Satyam, the current market prices are equally flawed, excepting that there is some speculation relating to prospective takeover having its impact on the market price,” said a legal expert who handles regulatory matters.

SEBI also announced on Monday that the amount to be paid upfront by allottees of preferential warrants will now be 25 per cent as compared with 10 per cent earlier.

Market-men said this will not allow the promoters to take advantage of the lower margin of 10 per cent. “It will avoid speculation,” said Mr George. “With the amount to be paid upfront being raised to 25 per cent, the promoters will now have more at stake to lose than earlier, when it was just ten per cent. They cannot take advantage of the low margin anymore,” said Mr V.K. Sharma, Whole-Time Director and Head of Research at Anagram Stock broking.

Companies can also now announce the price band of their IPOs “two days prior to the opening of the public issue, ” the SEBI Board decided.

“This will now bring the price point nearer to the IPO and the merchant bankers can price the issues more realistically,” said Mr Sharma.

More Stories on : Regulatory Bodies & Rulings | Open Offers | Satyam Computer Services Ltd

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