Sebi to revitalise primary market with e-IPO in new year

E-IPOs will help fast-track the public offer process and lower costs

To revitalise the market, the Securities and Exchange Board of India (Sebi) will soon notify new norms to sell shares through electronic Initial Public Offers (e-IPOs)

Manipulators could face stronger action in the new year, with tougher norms being finalised for insider trading.

Beside, Sebi is looking to herald the best global standards on corporate governance practices of the listed companies. The listing agreement signed by the companies with  stock exchanges would be converted into listing regulations for better enforcement of the norms.

New measures are also on anvil to revive the bond market and soon Sebi would come out with final norms for listing and trading of municipal bonds with an aim to channelise household investments for infrastructure building and contribute to the Prime Minister Narendra Modi's Smart Cities programme.

A keenly awaited move from Sebi in the new year would be an e-IPO mechanism, through which investment in public offerings can be done online without signing any physical documents.

E-IPOs will help fast-track the public offer process and lower the costs, besides allowing investors to apply for shares and buy these at a click on computers without the need for signature on bulky physical documents.

Currently, applications for IPOs can be uploaded on a real-time basis only through Asba (application supported by blocked amount). Only self-certified syndicate banks are authorised to manage and offer Asba, which allows application money to stay in an investor's bank account until the shares are allotted.

The board of Sebi had already approved a proposal to use secondary market infrastructure for public issuance called e-IPOs and revamping insider trading norms to prevent the menace.

Sebi, will soon notify relations for selling shares through e-IPO, sources said.

This will faciliate more retail investors in IPOs and the issuance process is likely to undergo a sea change, resulting in reduction in timelines, they added.

At present, the time taken for a company to get listed after initial share sale is around 12 days. Sebi might reduce the post issue timelines from T+12 days (12 days from issue closure to listing and trading) to T+6 days.

Once the process gets stabilised, timelines could be further curtailed to T+2/3 days, the sources said.

Despite a stable government coming into power and the resultant buoyant secondary market, fund raising through IPO was just Rs 1,528 crore in 2014.

Besides, only six main-board IPOs came to the market. The entire year saw just one follow-on offer. This was by state-run Engineers India Ltd (EIL), which also happens to be the biggest public offer with an issue size of Rs 495 crore.

The year, however, witnessed a flurry of activity on the small and medium enterprise (SME) platform. There were as many as 40 SME IPOs, which collected a total of Rs 267 crore.