The Securities and Exchange Board of India (Sebi) has proposed an 'Alternate Capital Raising Platform' where e-commerce and new-age companies can raise money from institutions and high networth individuals under a relaxed regulatory regime.
In a discussion paper on 'Alternate Capital Raising Platform', Sebi proposed that the new platform for raising money within the country will be initially made applicable to companies which are in the area of software product development, e-commerce and new-age companies having innovative business models.
The regulator said retail investors would be restricted from investing in such companies, given the risks involved. However, it said adequate disclosures would be required to be made without hampering the capital-raising potential of such firms in new-age sectors like technology.
Under the proposed platform, money should be raised only from institutions and high net-worth individuals by the companies with innovative business models and belonging to knowledge-based technology sector. "On account of the risk involved in investing in such companies, it is proposed that retail investors be restricted from investing in such companies," Sebi said.
The Sebi move comes at a time when many e-commerce companies are planning to get listed in Singapore or the US for price discovery and funding requirement. In India, tight guidelines for launching an IPO, especially the three year track-record, have put hurdles for the listing plans of such companies.
The Sebi paper has proposed that capital raising would be allowed on the Institutional Trading platform (ITP). The proposed platform will have two categories of investors — qualified institutional buyers (QIB) and non-institutional investors (NII). It has been suggested that the family trusts may also be allowed to apply under the QIB category. The listing on institutional platform would be for a period of at least one year. After that, the company would have the option to migrate to main board subject to compliance with eligibility requirements of the stock exchanges.
Sinha bats for pension funds
Sebi chairman UK Sinha on Monday pitched for the entry of pension money into various securities instruments in order to deepen the capital market.
"A well endowed domestic pension fund in India will be the panacea for a robust and sustainable capital market," Sinha said at the CII capital market summit here.
India does not have too many large domestic institutional investors who could invest in the capital market. The market has a large corpus of foreign institutional investment and there is a huge window for long-term equity investment in the markets for domestic pension funds which will reduce the vulnerability of the capital market, he said. ens
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