SEBI unveiled wide range of measures include:
a. PSUs to ensure at least 25% public shareholding withing three years
b. New norms for Research analysts
c. New norms for Employee Stock option schemes
d. Reforms to boost the primary markets
e. Common norms for KYC across the financial markets
Capital Market Watchdog, SEBI, approved slew of reform measures. Primarily, increasing the float in PSUs. There is a minimum 25% public shareholding in PSUs now. This will deepen the liquidity resulting in better valuation. Currently, PSUs have minimum 10% public shareholding whereas for non-PSU firms the minimum level is 25%. Many global funds are interested in putting money in such companies and in turn this will enable Government of India to raise significant amount of money, roughly Rs. 60000 crores. One such firm is Coal India Ltd.
In India, research analysts are not regulated. Now, they will be regulated. There will be registration with SEBI for them and post registration there are norms for disclosures.
With respect to ESOPs, there will be easier set of regulations. There will be ESOP Trusts a separate category of shareholding entities. Now companies can buy their own company shares subject to certain conditions. ESOP Trusts will be separate categories, they will be neither counted as a promoter group nor counted as a public. There will be five years of time provided to meet the conditions.
To boost primary markets, new dilution norms have been introduced. The requirement thus far was: All companies with a post-issue capital above Rs. 4000 crore are compulsorily required to offer at least 10 percent stake in the IPO. In other IPOs, minimum dilution to public was 25%. Imagine a case where a company is just few crores short of benchmark Rs. 4000 crore, for example a company at Rs. 3950 crore market cap has to dilute more than Rs 980 crores while a company just above Rs. 4000 crore has to dilute Rs. 400 crores only. The new norm is for an IPO above Rs. 4000 crores, the dilution is 10%, while for less than that 25% or Rs. 400 crores whichever is lesser. This will encourage new age companies as well as first generation firms to look at listing.
Additionally, retail investors would now get a 10 percent reservation in an offer for sale (OFS) and could look forward to dicounts by entities selling shares through this route. OFS has turned out to be very successful ways through which companies have raises substantial amount of money, roughtly Rs. 50000 crores. With reservation in OFS for retail customer is icing on a cake. Retail investors are not required to look for institutional investors but they will get a separate category. This in turn may excite retail investors and help them gung-ho for the primary markets. In turn, OFS has been expanded to 200 companies, compare to earlier 100 companies, will benefit more shareholders.
Increasing the Anchor Investor Bucket will rejuvenate the primary markets, help in better price discovery. Anchor investors are investing in the company during pre-IPO. The current norm is up to 30% of the cap on this, that is only upto 30% of the IPO value can be put in by the Anchor Investor, who belong to Qualified Institutional Buyers category. The cap of 30% is now increased to 60%, which will enable efficient price discovery, encourage greater participation by high quality institutional investors and bring more certainty to the IPO.
These measure will add life to the financial markets, and in turn add to the notion of achhe din aane wale hain!!
a. PSUs to ensure at least 25% public shareholding withing three years
b. New norms for Research analysts
c. New norms for Employee Stock option schemes
d. Reforms to boost the primary markets
e. Common norms for KYC across the financial markets
Capital Market Watchdog, SEBI, approved slew of reform measures. Primarily, increasing the float in PSUs. There is a minimum 25% public shareholding in PSUs now. This will deepen the liquidity resulting in better valuation. Currently, PSUs have minimum 10% public shareholding whereas for non-PSU firms the minimum level is 25%. Many global funds are interested in putting money in such companies and in turn this will enable Government of India to raise significant amount of money, roughly Rs. 60000 crores. One such firm is Coal India Ltd.
In India, research analysts are not regulated. Now, they will be regulated. There will be registration with SEBI for them and post registration there are norms for disclosures.
With respect to ESOPs, there will be easier set of regulations. There will be ESOP Trusts a separate category of shareholding entities. Now companies can buy their own company shares subject to certain conditions. ESOP Trusts will be separate categories, they will be neither counted as a promoter group nor counted as a public. There will be five years of time provided to meet the conditions.
To boost primary markets, new dilution norms have been introduced. The requirement thus far was: All companies with a post-issue capital above Rs. 4000 crore are compulsorily required to offer at least 10 percent stake in the IPO. In other IPOs, minimum dilution to public was 25%. Imagine a case where a company is just few crores short of benchmark Rs. 4000 crore, for example a company at Rs. 3950 crore market cap has to dilute more than Rs 980 crores while a company just above Rs. 4000 crore has to dilute Rs. 400 crores only. The new norm is for an IPO above Rs. 4000 crores, the dilution is 10%, while for less than that 25% or Rs. 400 crores whichever is lesser. This will encourage new age companies as well as first generation firms to look at listing.
Additionally, retail investors would now get a 10 percent reservation in an offer for sale (OFS) and could look forward to dicounts by entities selling shares through this route. OFS has turned out to be very successful ways through which companies have raises substantial amount of money, roughtly Rs. 50000 crores. With reservation in OFS for retail customer is icing on a cake. Retail investors are not required to look for institutional investors but they will get a separate category. This in turn may excite retail investors and help them gung-ho for the primary markets. In turn, OFS has been expanded to 200 companies, compare to earlier 100 companies, will benefit more shareholders.
Increasing the Anchor Investor Bucket will rejuvenate the primary markets, help in better price discovery. Anchor investors are investing in the company during pre-IPO. The current norm is up to 30% of the cap on this, that is only upto 30% of the IPO value can be put in by the Anchor Investor, who belong to Qualified Institutional Buyers category. The cap of 30% is now increased to 60%, which will enable efficient price discovery, encourage greater participation by high quality institutional investors and bring more certainty to the IPO.
These measure will add life to the financial markets, and in turn add to the notion of achhe din aane wale hain!!
Comments
Post a Comment