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IPO News: Sebi plans to make monitors mandatory for IPOs up to Rs 500 crore

India Notes 2017-04-20 00:00:00

Sebi plans to make monitors mandatory for IPOs up to Rs 500 crore

The Securities and Exchange Board of India (Sebi) plans to make it mandatory for companies raising less than Rs 500 crore through initial public offering (IPO) to appoint a monitoring agency to keep track of the use of funds. The board also plans to reduce paperwork for foreign portfolio investors wanting to bring money into the country and allow systemically important non-banking finance companies (NBFCs) in the institutional category in public issues. These proposals are likely to be discussed at the Sebi board meeting on April 26 which will be Ajay Tyagi's first as the capital markets regulator. The Sebi board is also likely to discuss allowing options trading for commodities, unified licence for brokers, use of e wallet for investments in mutual funds and instant withdrawal facility in mutual funds among other things. At present, only companies with an issue size of over Rs 500 crore have to appoint a monitoring agency. The bankers to the issue usually act as the monitoring agency and provide up-to-date information about how the money has been used by the company. The proposal to make it compulsory for all companies comes after Sebi noticed a mismatch between the stated purpose of the IPO and its end use. It has been found that firms have used IPO money for purposes other than the listed objectives of the issue either by obtaining shareholder approval or by masking the uses.

Govt identifies 6 PSUs to list on bourses

The government has identified six profit making PSUs, including four from defence sector, for accessing the capital market in the current fiscal and listing on stock exchanges. The Department of Investment and Public Asset Management (DIPAM) is scouting for merchant bankers and legal advisors to advise the government on the Initial Public Offering (IPO) of MSTC, NEEPCO, Bharat Dynamics Ltd, Garden Reach Shipbuilders & Engineers Ltd, Mazagon Dock Shipbuilders Ltd and Mishra Dhatu Nigam Ltd. The government currently holds 100 per cent stake in all these six companies. The merchant bankers are required to submit their bids by May 2.

RITES, Rail Vikas Nigam, 9 other PSUs’ listing cleared by Cabinet

Building up momentum for time-bound listing of PSUs, the Union Cabinet, on Wednesday, approved listing of 11 companies including RITES and Rail Vikas Nigam. The government plans to divest upto 25% of its shareholding in these PSUs via IPOs, which are expected to hit market in 2017-18. Other PSUs approved for IPO are North Eastern Electric Power Corporation, MSTC, Mazagon Dock Shipbuilders, Indian Railway Finance Corporation, Indian Railway Catering and Tourism Corporation, IRCON International, Mishra Dhatu, Garden Reach Shipbuilders & Engineers and Bharat Dynamics. According to the procedures outlined by the department of investment and public asset management on February 17, a profitable PSU would have to list on the stock exchanges within 165 days, after the administrative ministry is on-board for the plan. IPOs are part of the government’s annual disinvestment programme.

Hudco gets Sebi approval to float IPO

State-run Hudco has received capital markets regulator Sebi’s approval to raise funds through an initial share sale as part of the government’s disinvestment drive. Hudco had filed draft papers with the Sebi in January and got the markets watchdog’s “observation” on March 10, which is necessary for any company to launch public offer. The initial public offer will comprise sale of 200,190,000 equity — 10 per cent stake — by the central government through an OFS route, as per DRHP. A discount of up to 5 per cent on the issue price would be given to retail investors and Hudco employees. The paid up capital of Housing and Urban Development Corporation (Hudco) is Rs 2,001.90 crore as on March, 2016. The government holds 100 per cent stake in the company. IDBI Capital, Nomura Financial Advisory and Securities, SBI Capital Markets and ICICI Securities will manage the company’s public issue. The proceeds from Hudco disinvestment will form part of the government’s disinvestment kitty in the current fiscal. The government expects to raise Rs 56,500 crore through minority stake sale and strategic sale in PSUs this fiscal. Of this, Rs 36,000 crore is to come from minority stake sale in PSUs and another Rs 20,500 crore from strategic stake sale.

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