Jul 24, 1999|
Sebi: Time to take a decision
A Sebi appointed primary market advisory committee has recommended that infotech, media and telecom firms should be allowed to access the primary market with a minimum public offering of 10% of equity. However, the committee has suggested a minimum issue of 2 mn shares and a minimum offer size of Rs 300 m. The current regulations state that a minimum of 25% of the equity be issued to the public. The committee has also suggested that listing of debt be permitted before the listing of equity, making it mandatory to issue equity issues less than Rs 250 m in demat mode and making amendments to the book building guidelines.
The measures of the primary market advisory committee are aimed at rejuvenating the primary markets. By reducing the size of the minimum offerings for select sectors, the committee has attempted to curtail the rush of companies to foreign equity markets. The companies in these select sectors, many of which do not wish to make large equity issues, have large funding needs for which they need to access the primary debt and equity markets. This move will make the markets a ready source of fund mobilisation for companies in these sectors.
The proposal to permit the issue of debt before issuing equity in the markets too will go a long way in developing the debt markets. Private companies and municipal corporations among others will then issue debt without necessarily going in for an equity issue.
Finally, with book building yet to pick up in the country, it is necessary that amendments be made to existing guidelines to make the exercise more popular.
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