The Hindu Business Line : New SEBI norms for institutional placement

THE committee set up by SEBI on raising funds from the domestic market has said the aggregate number of the proposed placement and all previous placements made in the same financial year in terms of placement size should not exceed five times the pre-issue net worth as per the audited balance sheet of the last financial year.

Under the scheme, only QIBs as defined in the Disclosure and Investor Protection guidelines would be permitted to participate in the restricted institutional placement. No allotment would be permitted directly or indirectly to promoters or persons acting in concert with them.

FIIs, VC funds and foreign VC funds could participate in above placement only if they have no special arrangements in the form of shareholder agreements, including board representation etc. (if they do, then they must come in through the preferential route), the SEBI report said.

Allocation would be discretionary subject to a reservation of at least 10 per cent in favour of mutual funds registered with SEBI. Securities allotted under this route can only be transferred on the floor of the stock exchange or in a bulk/block transaction in accordance with the procedures prescribed by SEBI, the report said.

There should be at least two investors for an issue size of up to Rs 250 crore and at least five investors for an issue size in excess of Rs 250 crore. No single investor would be allotted greater than 50 per cent of the issue.

On pricing, the SEBI committee said it should be on par with those for GDR issues, in terms of MOF guidelines. Allotments can be made on payment of 25 per cent of the price, in case of equity shares and convertibles (other than warrants). In case of warrants, the payment stipulations shall be 10 per cent on allotment of warrants, with equity shares being allotted only after payment of balance 90 per cent.