Sebi board meet today

The Securities and Exchange Board of India's (Sebi) board meeting tomorrow is expected to discuss issues related to IPOs of real estate firms. The new norms may make disclosure of land banks and valuation more comprehensive for realty firms.

The board may also take up imposition of a price ceiling for debutante shares.

Another issue that would come up is ways to tackle foreign institutional investors' unhealthy practice of revising their bids for IPOs just before the closure of the offer.

Policy framework to set up self regulatory organisations (SROs) of stock market intermediaries, allow mutual funds to launch infrastructure funds and short selling of shares by institutional investors may also be discussed, sources said.

Proposals by several entities to set up stock exchange for small and medium enterprises (SMEs) are also expected to be discussed, sources said.

On the issue of SROs, sources said, Sebi favours unified SROs for various segments of market intermediaries viz., mutual funds, stock brokers, merchant bankers and for registrar & transfer agents (RTAs).

Similarly, the board, which is meeting for the first time after the Union Budget, is also expected to discuss the budget proposal to allow mutual funds to invest in infrastructure projects through dedicated infrastructure funds.

Allowing short selling for institutional investors, which was another policy direction outlined in the budget, is also expected to come up before the regulator.

The eligibility criteria for the stocks that qualify for short selling and the guidelines for stock lending and borrowing programme, which would be introduced along with short selling, would also be discussed at the board meeting.

Sources said the Sebi top executives, who recently met the investment bankers, are also concerned with the high price band set by the real estate IPOs. Several such IPOs, which happened when the stock market was at the peak, are now trading more than 50 per cent below their recent highs, it was pointed out.

Investment banking sources said Sebi wanted the real estate IPOs to disclose their land banks and their valuations at current prices in the draft prospectus filed with the regulator.

"There will be changes in the DIP (disclosure and investor protection) guidelines where realty companies would be asked to come out with a more comprehensive and transparent disclosure of their land banks in the red-herring prospectus," an official said. "Sebi wants the disclosures to be more investors friendly."

Another issue that concerns the regulator relates to the huge withdrawal of applications by QIBs before the close of an IPO. It was observed that during the IPO of Cairn, QIBs bid in large quantity before they revised their bid numbers downwards during the last day of closure.

Retail investors usually look at QIB subscription to get a clue on whether to apply for an IPO or not.

Sebi now wants to plug this loophole by bringing in required changes in the QIB application norms, sources said.

REAL ESTATE IPOs

More exhaustive disclosure of land banks

Mode of valuation of realty firms

POLICY FRAMEWORK

SROs for stock market intermediaries

Infrastructure funds by mutual funds

Short selling by institutional investors