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The central government is planning to write to the Securities and Exchange Board of India (Sebi) for faster approvals of offer documents to meet its objective of time-bound listing of public sector undertakings (PSUs). On an average, Sebi takes a little over two months to clear initial public offer (IPO) documents. The centre wants PSU IPOs to be cleared within a month.
The move comes in the wake of the budget announcement on fast tracking the PSU listing process. Interestingly, the Department of Public Asset Management (Dipam) in a document outlining the new timeline for PSU listings has assigned just 30 days for Sebi approval. The Dipam expects the entire process to be completed within 165 days.
"Clearance from Sebi is one of the key factors that determine the timeline for listing a company. Centre is planning to seek expedited approvals as it has set itself an ambitious target of getting the offer document cleared in 30 days. There have been initial round of interactions between Sebi and Dipam officials regarding the same," said a person with the knowledge of the development.
Dipam has assigned 90 days for preparation and filing of the draft prospectus. Post getting an approval from Sebi, the public offering is expected to launch within one month.
"Having a set timeline is a good initiative by Dipam as it would enable timely listing of various PSUs. The new mechanism should help in better coordination between all the stakeholders involved," said Sudhir Bassi, partner, Khaitan & Co.
"The timeline specified is difficult to achieve even if they get Sebi on board for the proposal. Examining an offer document could take at least 20 days for Sebi. It doesn't take into account the possibility of Sebi asking for any further clarifications," said an investment banker.
Bankers also suggest rather than informally asking Sebi to clear PSU documentations faster, the exception could be incorporated in the regulations.
"I don't think the regulator should have any problem in providing special relaxations to government promoted entities. These provisions will help the PSUs list faster. The said exceptions could be included in the section 26(1),(2) and (3) of Sebi Issue of Capital and Disclosure Requirements (ICDR) regulations," said Madhuprasad, Chairaman, Keynote Corporate Services.
Industry players say the government could also ask Sebi for providing exceptions to PSUs in certain disclosure requirements. For instance, current mandate a company to have a woman director on the board at the time the company files its offer documents. In case of PSUs, the condition could be relaxed to having a woman director by the time of listing," said an investment banker.
For the first time in many years, the pipeline of PSU IPOs looks strong as nearly dozen public owned entities are planning their public issues. Cochin Shipyard and Housing and Urban Development Corporation (Hudco) have already filed their draft prospectus with Sebi. Apart from these, there are three general insurance companies (GIC) including New India Assurance which are expected to come up with their public offering in the next few months. Centre is also planning to list three companies Indian Railway Catering and Tourism Corporation (IRCTC), IRCON and Indian Railway Finance Corporation (IRFC).