Mumbai: The Sebi’s proposal to allow companies with lower market capitalisation to go for follow on public offers (FPO’s) or rights offers through the fast track route is expected to benefit hundreds of small and mid -sized listed firms. Under the existing regulatory framework, the fast track route is available only to listed issuers with a market capitalisation of minimum Rs3,000 crore and above.
Sebi is exploring the possibility of extending the fast track route to companies having an average market capitalisation of public shareholding between Rs 250 crores to Rs 3,000 crores, subject to fulfilment of certain additional conditions.
According to SMC Global Securities, there are as many as 706 small and midsized listed firms in India, which have a m-cap of between Rs 250 crore-Rs 3,000 crore. Under the fast track route for rights issues and FPO’s, no draft offer document is required to be filed with Sebi. The issuer can open the issue immediately after filing the red herring prospects. “Earlier if it was taking six months to complete the fund raising process, now it will take just six weeks.
The fast track issues will more or less look like a QIP. The only difference being that retail and HNW investors can participate in FPO’s and rights issue whereas only few institutional investors could participate in a QIP,” said Jagannadham Thu-nuguntla, head of rese-arch and chief strategist, SMC Global Securities. However, Sebi said that promoters should subscribe to their rights entitlement.
