'Easing fast-track route norm to benefit 80 firms'

Last Updated: Fri, Sep 21, 2012 04:47 hrs

The relaxation of eligibility norms for fund raising through the fast-track route will benefit 80 issuers, says the capital markets regulator Securities and Exchange Board of India (Sebi).

The market watchdog, recently, relaxed the threshold free-float market capitalisation (m-cap) level for issuers to access the market through fast-track follow-on public offering (FPO) and rights issues from Rs 5,000 crore to Rs 3,000 crore.

Some of the companies likely to benefit include Reliance Capital, ABB , Bharat Forge, Aditya Birla Nuvo and Crompton Greaves. Among public sector undertakings, Hindustan Petroleum Corp, Oil India, Union Bank of India, Mangalore Refinery and Petrochemicals and MMTC will qualify for fast-track clearances.

  • Free-float m-cap threshold for fast-track issues lowered from Rs 5,000 cr to Rs 3,000 cr
  • Relaxed norm to help more firms raise money quickly through FPO or rights issue
  • Firms like Reliance Capital, ABB, Bharat Forge and Aditya Birla Nuvo to benefit

Free-float m-cap includes only those shares issued by the company that are readily available for trading in the market. It generally excludes promoters' holding, government holding, strategic holding and other locked-in shares that will not come to the market for trading in the normal course.

Sebi decided to relax the norms following a recommendation from Sebi's Primary Market Advisory Committee.

"Considering the objective of making the process of such fund raising faster and easier for issuers, it is proposed to accept the recommendations of the committee. About 80 issuers are expected to benefit from this proposal," said Sebi in a board meeting agenda paper.

Earlier, only companies with free-float m-cap of Rs 5,000 crore were eligible for getting fast-track clearances from Sebi for fund raising through the FPO or rights route.

"The fast-track route of fund raising is an alternative available for well-established and compliant companies to access public funds by way of further capital offerings. One of the conditions for companies to be able to access funds through the fast-track route is to have a minimum average free float market capitalisation of Rs 5,000 crore," Sebi says.

This is the second time that the regulator has relaxed the eligibility guidelines for the fast-track route. In 2009, it had brought down the average free-float m-cap requirement to Rs 5,000 crore from Rs 10,000 crore.

In the past, companies like NTPC have raised capital by way of FPO after clearances through the fast-track route.

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