Sebi moots easier fund raising norms

New Delhi: To ease fundraising for stressed companies, markets regulator Sebi on Wednesday proposed easier pricing guidelines under the preferential route and exemption from making an open offer for the allottees of such issue.

Listed companies that are facing financial stress are in need of fund infusion to tide over the current stress situation. Typically, listed companies having 'stressed assets' experience progressive fall in their share price.

The Securities and Exchange Board of India (Sebi) said these companies are often in urgent need of capital from financial investors, as other sources of funds tend to dry out at this stage. Accordingly, in the draft papers, Sebi has proposed pricing should not be less than the average of the weekly high and low of the volume weighted average prices of the related equity shares on a recognised stock exchange during the two weeks preceding the relevant date.

At present, the determination of the pricing covers a period of 26 weeks or more for frequently traded shares. Further, a case has also made by such investors to have a substantial holding in the company, in order to take control over the operations of the company and guide the company out of the stress.

However, this acquisition of substantial holding and control triggers the obligations by such investor to make open offer to the other investors under the SAST norms, which require him to acquire 26 per cent more shareholding.