New guidelines to apply after May 1; Asba process to be modified.
In its endeavour to make the public issue process more efficient, the Securities and Exchange Board of India (Sebi) has proposed to reduce the time between the closure of the issue and listing to 12 days from May 1.
The regulator has also said the Asba (Application Supported by Blocked Amount) process will be modified to make it consistent with the new timeline.
“Sebi proposes to reduce the time between public issue closure and listing to 12 days from the existing one of up to 22 days,” said a circular released today. “This will be applicable to public issues opening on or after May 1,” it added.
Sebi Chairman CB Bhave, on many occasions, has made it clear that the regulator wants the overall time for a public issue to be cut to seven days.
Investment bankers say this move will make the issuance process tough, especially if there are holidays in between. The circular, they say, is silent on whether the process should be completed within 12 days or 12 working days.
“While it is a good move, it will be tough for investment bankers. I wish the circular had stated 12 working days instead of 12 days,” said Dara Kalyaniwala, vice-president (investment banking), PL Capital Markets. “Further, the circular is silent on the issue of fixed price offerings where there are no syndicate members involved. Investment bankers will have to cut the number of bidding centres to ensure that final certificates are issued quickly. A huge plus is that the move will save a lot on interest cost for IPO (initial public offer) applications made with borrowings,” he said.
Meanwhile, Sebi has made it clear that the new process will require syndicate members to capture all data relevant for finalising the basis of allotment while uploading the bid data in the electronic bidding system of stock exchanges. However, to avoid discrepancies, the regulator has allowed syndicate members an additional day to modify some of the data fields in the electronic bidding system.
The new process would require syndicate members to capture all data relevant for purposes of finalising the basis of allotment, while uploading bid data in the electronic bidding system of stock exchanges. To ensure the data so captured is accurate, syndicate members would be permitted an additional day to modify some of the data fields entered by them in the electronic bidding system.
“The registrar to the issue is required to validate the bids and finalise the basis of allotment only on the basis of the final electronic bid file provided by stock exchanges,” said the circular, emphasising that lead managers or their agents would be responsible for the accuracy of the data entered and resolving investor grievances.
Incidentally, the reduced timeline would coincide with the new norms on margin requirements. Sebi’s board meet on March 6 had said qualified institutional buyers (QIBs) would have to pay 100 per cent upfront margin while bidding in public issues that open on or after May 1. Currently, QIBs pay only 25 per cent margin while applying, while high net worth individuals and retail investors pay the full money upfront.
