| Sebi throws a lifeline to primary market |
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New Delhi/ Mumbai, 19 June Capital market regulator Securities and Exchange Board of India ( Sebi) on Thursday announced a slew of measures to boost equity issuances by India Inc and help rejuvenate the primary market, which at present seems to be in deep slumber. In a move that will level the playing field between private and state- owned companies and bring in paper supply of nearly $ 10 billion over the next three years, Sebi has proposed even public- sector undertakings ( PSUs) would need to have at least 25 per cent public float, compared with the current cap of 10 per cent. The regulator said the government would be given three years to meet the holding requirement. "Under the current rule, while non- PSUs are required to have a minimum 25 per cent public shareholding, state- run firms are required to have only 10 per cent. That is discriminatory and inconsistent with the broader market design," Sebi said in a statement. "Sebi believes the rules for the market should be uniform across companies and should be promoterneutral," it added. Turn to Page 7 > OFS ROUTE MADE AVAILABLE TO TOP 200 FIRMS BY M- CAP MINIMUM DILUTION CRITERIA FOR SMALLER FIRMS EASED PSUs GET THREE YEARS FOR 25% PUBLIC FLOAT BREATHING LIFE Sebis measures and their likely impact RESEARCH ANALYSTS UNDER SEBI AMBIT Now: The Sebi ( Research Analyst) Regulations, 2014, approved to register and regulate individual research analysts and entities Earlier: No registration required IMPACT: There will be more transparency and accountability ESOP ISSUANCE NORMS Now: Secondary- market purchases allowed with strict riders Earlier: Esops could be offered only through fresh issue of shares IMPACT: Will give India Inc more leeway in rewarding employees QIP PRICING NORM Now: On the basis of volumeweighted average price Earlier: On the basis of closing price IMPACT: Better price discovery ANCHOR- INVESTOR LIMIT Now: 30% of the issue size from the institutional investor bucket Earlier: 15% of the issue size from the institutional investor bucket IMPACT: Almost a third of IPOs will be covered even before opening; anchor investors commitment will give confidence to retail investors STAKE DILUTION VIA IPOs Now: Minimum dilution of 25% or ₹ 400 crore, whichever is lower, for companies with valuation of up to ₹ 4,000 crore Earlier: Minimum dilution of 25% if valuation is less than ₹ 4,000 crore IMPACT: Smaller firms might not have to dilute 25% in one go 25% PUBLIC FLOAT FOR PSUs Now: All PSUs need to have at least 25% public float, like private firms Earlier: 10% minimum public float for PSUs IMPACT: Govt will have to divest ₹ 60,000 cr worth of stake in 36 PSUs; investor base will be diversified OFS SCOPE Now: Retail quota of 10% and provision for retail discount; made available for top 200 firms and non- promoters with holding of over 10% Earlier: No separate quota or discount for retail; available only to promoters and top- 100 companies IMPACT: More entities can go for secondary divestment via OFS route; equity issuances will improve THE SMART INVESTOR P16 > >PSU indices wobble on free float rule >Research analysts must registerwith Sebi to give advice >OFS may emerge secondary share sale route of choice |
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| Sebi throws a lifeline to primary market |
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Market players said the move would help attract new investors to the equity market. "Government issuances are always welcomed by investors. This will also help bring back retail investors in a big way. Both in terms of volume and quality of issuances, Isee this as a big positive for the market," said Kotak Investment Banking Executive Director Gesu Kaushal. In a move that will encourage more companies to launch initial public offerings ( IPO), Sebi relaxed the minimum dilution criteria for smaller companies. Against the earlier norms that forced companies with valuations of less than ₹ 4,000 crore to sell a minimum of 25 per cent stake in IPOs, the regulator introduced a new threshold of ₹ 400 crore. Going ahead, a company will have to divest at least ₹ 400 crore or 25 per cent, whichever is lower, through an IPO. The regulator also doubled the portion meant for anchor investors in IPOs — the limit for these investor has been increased from 15 per cent to 30 per cent of the issue size. The shares, however, will be given from the institutional investor bucket, which is 50 per cent of the overall IPO size. Anchor investors are those institutions that invest in IPOs days before opening dates and whose investments are locked in for a period of 30 days from the date of allotment. By committing capital to an IPO even before the opening of the issue, these investors send a positive signal to others. "The proposed changes in the IPO norms are welcome. The anchor- investor limit increase will result in a larger book available for |
| Decision soon on FDI in rail projects, fare hike |
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New Delhi, 19 June The cash- short railways want to tap funding from the private sector and is likely to take a decision on foreign direct investment ( FDI) projects shortly. Minister Sadananda Gowda has met his commerce and industry counterpart, Nirmala Sitharaman, in this regard. Some key projects expecting FDI funding could be a part of the railway budget. And, the pending decision on a fare rise is likely next week. The railways had put a 6.5 per cent increase in freight rates and 10 per cent in passenger fares under the fuel adjustment component on hold, awaiting the formation of a new government. "We are short of resources and we need to mobilise all possible avenues of funding. We are holding discussions with the ministry of industry and commerce and very soon, we will come out with the course of action. The decision on fare hike will come in the next four- five days," said Gowda to the media after a meeting of general managers. With public- private partnerships to be a focus area in the coming budget, the railways want the policy to get finalised as soon as possible. Port connectivity projects expecting FDI funding could be a part of the coming rail budget. Last year, private players had shown interest in various port connectivity projects worth over ₹ 3,800 crore. Also, projects such as the locomotive factories for Marhowra and Madhepura have evoked the interest of various international companies. The two projects are estimated to cost ₹ 3,400 crore. However, these companies require more clarity on policy. In December 2012, the railways ministry had notified aPolicy for Participative Models for rail connectivity and capacity augmentation projects, after a government notification of 2012 permitted foreign investors in construction of fixed rail infrastructure projects and maintenance. NOT ON TRACK Some key focus areas for the railways |Clean and hygienic stations and trains |Ensure 100 per cent punctuality of trains |Change the working culture, shed hierarchy |Engage more with ground- level officers for new solutions |Ensure safety of women and elderly |
Source Business Line
Speed voting enthrals Reliance shareholders MAHISHA JHA/ JAYANTA MALLICK
Voting done via tablet devices MUMBAI/KOLKATA, JUNE 19: Though the Ministry of Corporate Affairs has deferred mandatory e-voting for shareholders until December 31, Reliance Industries' shareholders got a taste of it during the company's 40th AGM, on Wednesday. During the exercise, which lasted about 30 minutes, some shareholders were seen huddled in small groups around volunteers brandishing shiny new tablets while some preferred to approach volunteers individually to peer over the tablet screen and register their votes through the touch pad. No one insisted on polling on the ordinary resolutions. But taking a cue from the new Companies Act, RIL Chairman Mukesh Ambani, conducted a spot poll. Quick process More votes "The Karvy InstaPoll system, based on Wi-Fi connectivity and backed by a local server physically installed at the venue, conducted the poll in a short span of time and the result was declared after scrutiny," said V Ganesh, CEO of Karvy Computershare. Karvy, which formally launched the product on Thursday, said the system would be made available to its over 500 clients. (This article was published on June 19, 2014) |
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