To expedite PSU listing, Centre to dial Sebi

On an average, Sebi takes 70 days to clear IPOs; govt wants those cleared in 30 days

The central government is planning to write to the Securities and Exchange Board of India (Sebi) for faster approval of equity offer documents, to meet its objective of time-bound listing of public sector undertakings (PSUs). 

On an average, Sebi takes a little over two months to clear initial public offers (IPOs). The Centre wants those for PSUs to be cleared within a month.

The move comes in the wake of the Budget announcement on hastening of PSU listing. The department of investment and public asset management (Dipam), in a document outlining the new timeline for PSU listings, has assigned only 30 days for Sebi approval. It expects the entire process to be complete within 165 days.

“Clearance from Sebi is one of the key factors that determine the timeline for listing. The Centre is planning to seek expedited approvals, as it has set itself an ambitious target of getting the offer document cleared in 30 days. There have been initial interactions between Sebi and Dipam officials,” said a person in the know.

Dipam wants only 90 days for preparation and filing of the draft prospectus. After getting Sebi approval, the public offering is expected to launch within one month. “Having a set timeline is a good initiative by Dipam. The new mechanism should help in better coordination between all the stakeholders,” said Sudhir Bassi, partner, Khaitan & Co.

A section of investment bankers think it is too ambitious of Dipam to expect a nod from Sebi within a month. “The timeline specified is difficult to achieve even if they get Sebi on board for the proposal. Examining an offer document could take at least 20 days for Sebi. It doesn’t take into account the possibility of Sebi asking for further clarifications,” said an investment banker.

One suggestion is that rather than informally asking Sebi to clear PSU documentation faster, the exception could be incorporated in the regulations. “I don’t think the regulator should have any problem in providing special relaxations to government-promoted entities. The said exceptions could be included in sections 26(1), (2) and (3) of the Sebi (Issue of Capital and Disclosure Requirements) Regulations,” said Madhu Prasad, chairman, Keynote Corporate Services.

 

The government could also ask Sebi to provide exceptions to PSUs in certain disclosure requirements. For instance, the mandate for a woman director on the board at the time the company files its offer documents. “In the case of PSUs, the condition could be relaxed to having a woman director by the time of listing,” said an investment banker.

For the first time in many years, the pipeline of PSU offer documents looks strong, as nearly a dozen state-owned entities are planning their public issues. Cochin Shipyard, and Housing and Urban Development Corporation have filed their draft prospectus with Sebi. Three general insurance companies are expected to do so in a few months. The Centre is also planning to list Indian Railway Catering and Tourism Corporation, Ircon and Indian Railway Finance Corporation.