SEBI tweaks norms for OFS,IPP

The regulator has decided to relax the mandatory 12-week time gap requirement between two consecutive Offer for Sale (OFS) or Institutional Placement Programme (IPP).

However,a gap of two weeks between two successive OFS or IPP should be maintained,it said,adding,this would also be applicable on promoters who have already offloaded their shares through OFS or IPP.

The reduction in the time gap will help companies to offload shares in more than one tranches depending on market conditions.

The board also decided that indicative price should be displayed during the last 60 minutes of the close of bidding session irrespective of the book being built.

However,as per the existing provision,bids were invited without disclosing indicative price during the trading hour. The display of indicative price could also lead to bidding happening at the last one hour of trade.

“These changes have theoretical significance as market conditions are not very conducive for public offers,” SMC Global equity head Jagannadham Thunuguntla said.

The decision will also help the government to expeditiously offload its stake in public sector companies and raise funds for achieving the disinvestment target of Rs 30,000 crore for the current fiscal.

With regard to modification or cancellation of bids,the board decided that this can be done in the last 60 minutes instead of last 30 minutes of the trade.

The minimum size of the offer should be Rs 25 crore. However,the size of offer can be less than Rs 25 crore so as to achieve minimum public shareholding in a single tranche,it said.

Such changes have been done so that the companies can achieve the minimum 25 per cent public holding guideline by June 2013.

All listed companies are required to have at least 25 per cent public holding by June 2013 while in case of state-owned company the limit is 10 per cent to be met by August 2013.

There are 12-13 PSU companies which have to meet the public holding guidelines can benefit from the changes in norms.

SEBI also said that the institutional investors shall have the option of applying with 100 per cent upfront margin in cash or with an adhoc margin of certain lower percentage to be determined by the exchanges.

The companies which have conducted share sales through these two new routes include ONGC,Wipro,Godrej Properties and DB Corp.