Sebi tweak encourages companies to advance listing plans

India’s initial public offering (IPO) market, which stagnated in May after the start of strict new guidelines for investment bankers and other intermediaries, is likely to gain momentum with Securities and Exchange Board of India (Sebi) delaying the implementation of some of the provisions.

In March, the market regulator made changes to the IPO application process after receiving complaints that the amount of demand from many small investors using the Unified Payment Interface (UPI) remained stuck for several days, although no action was attributed to them. The circular of March 16 also ordered intermediaries to compensate investors for such delays beyond the stipulated deadlines.

This circular, which entered into force on May 1, put an end to the IPO activity, already impacted by the second wave of covid-19, the investment bankers believing that the new procedures could not be put. implemented immediately. After the steps taken by the investment bankers, Sebi postponed the implementation of certain procedures.

“Various representations have been made by bankers to the regulator to give more time to the implementation of these processes. Many of these processes are not under the direct control of investment banks. You have the UPI system, the stock exchanges and other intermediaries involved and therefore it has proved difficult to implement these procedures upstream and more time has been requested from the regulator, ”said an investment banker under the guise of anonymity.

The last IPO to hit the markets was the Sale of 2,500 crore shares of real estate firm Macrotech Developers Ltd, formerly known as Lodha Developers, which closed on April 9. Earlier, in the first three months of 2020, 16 IPOs raised 14,994 crore, based on data from the Prime Market Tracking Database.

In a new circular dated June 2, Sebi agreed to delay the implementation schedule for some of the revised procedures.

“Paragraph 9 of the circular prescribes the details to be sent by SCSBs (self-certified syndicated banks) in SMS alerts. While the SCSBs will continue to send SMS alerts during the actual block / debit / unblock of the UPI mandate in the prescribed format, details of the total number of actions applied / allocated / unassigned will be included in the SMS for public broadcasts. open on / after January 1, 2022 “, specifies the Sebi circular.

“To facilitate business, paragraph 10 of the circular prescribed a web portal that would be hosted by sponsor banks for closed user group (CUG) entities. In view of stakeholder statements, it has been decided that the automated web portal will be up and running after mock testing and testing with CUG entities for issues open as of October 1, 2021, ”he said. .

After the easing, at least a dozen companies have started pushing IPO plans and a few IPOs are expected to launch in the second half of June, a second banker said. Kolkata-based Shyam Metalics & Energy Ltd, which manufactures long steel products, has announced plans to go public next week.

“Sebi, through its circular, offered respite to intermediaries requiring a major overhaul of internal processes. However, the postponement of the March circular is not generic and covers areas where there is a proven challenge in its implementation. The circular does not postpone the deadlines for implementing investor compensation mechanisms, ”said Ravi Dubey, partner at IndusLaw law firm.

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