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SEBI Discussion Paper on 'Revisiting the capital raising process'

Securities market, including the market for public offerings, is dynamic and need to keep pace with the evolving environment. In order to keep pace with the changing economic environment and to address concerns of various market participants especially the issuers and the investing community, the regulations governing the primary market have been amended from time to time. Such a timely review intends to facilitate capital raising by industry while ensuring adequate investor protection.

It has been observed that existing listed issuers have preferred private placement including Qualified Institutional Placement (QIP) route vis-à-vis a subsequent offerings by way of Further Public Offer (FPO) / Rights Issue. Further, participants in various forums have indicated that issuers have inclination towards private placement, because of shorter time frame and lower costs associated with such route. Therefore, SEBI has been examining how to further facilitate capital raising by existing listed companies through FPO/Rights issue so as to provide retail investors the opportunity to participate in subsequent offerings and enable issuers to raise capital in the shortest possible time span.

Further, SEBI has been continuously striving to shorten the time duration from issue closure to listing. Towards this end in 2010, the timeline was reduced from 22 days to 12 days. SEBI has been exploring ways and means to further curtail the timeline from 12 days.

In view of the above, the instant paper contains proposal on the following two areas and seek public comments on the same:

  1. Proposal on use of Secondary Market infrastructure for making applications in Public Issue (“e-IPO”)
  2. Proposal on Fast Track Issuances (FPO and Rights Issue)

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