SEBI To Allow 30 Firms To Raise Funds Quickly

In a bid to encourage Indian corporates raise money domestically, the Securities and Exchange Board of India (SEBI) is in the process of rolling out a package.

The package, SEBI chief M Damodaran said, will help corporates raise capital at an advantageous cost and within a shorter timeframe.

The first move would be to announce the framework for fast-track issuances, wherein listed companies with proven track records would be able to raise money immediately after filing with SEBI.

The draft of the proposal has been approved by the primary market committee, Damodaran said.

“These (fast-track issuances) are for well-known issuers which come to the market time and again. If they have reached a certain size, have a track record that is acceptable to the regulators, they are facilitated to raise money after filing documents, without getting the documents vetted and approved,” Damodaran said.

This would be on the lines of the Well Known Seasoned Investor or WKSI model in the US. It’s likely to be introduced by the end of this month.

Damodaran said that about 30 Indian companies, which comply with the norms set by the committee, will be allowed such issuances.

According to the draft guidelines issued on August 24, 2007, such companies would have to be listed on the BSE or the NSE for at least three years and must have an average free-float market capitalisation of at least Rs 10,000 crore during the past year.

In addition, the company would need the stock exchange, board and shareholder resolution to file a letter of offer. As soon as the prospectus is filed with SEBI, the company can proceed with the issuance, the draft stated.

When implemented, India would be the first emerging market to have the system and one of the few markets after the US. The qualified institutional placement (QIP) route of raising money is also likely to be made more attractive by October-end.

"A lot of people who had intended to raise money through GDRs and had got resolutions from shareholders to raise money through GDRs, have found that it is easier, cheaper and faster to raise money in India if you adopt the QIP route," Damodaran said, addressing the IIFT-FICCI National Symposium on Tuesday.

"Yesterday (Monday) one of our advisory committees has cleared for us a package of recommendations that we will hopefully be able to implement by the end of this month, which will make this product even more attractive," Damodaran said.