SEBI's proposal to allow pension funds as anchor investors in public issues

MUMBAI: SEBI has proposed to allow pension funds sponsored by entities that are associates of lead managers to participate as anchor investors in public issues. Currently pension funds that are not affiliates of lead managers can participate as anchor investors in the book building process. However, an exception is made for pension funds of entities that are affiliates of lead managers to participate as anchor investors in public issues of real estate investment trusts (REITs).

Sebi has proposed in its consultation paper that the rules should be amended to allow institutional pension funds to participate as anchor investors in public issues. In addition, SEBI has proposed amendments to the rules relating to public issues in dematerialized form such as initial public offering (IPO) and follow-on public offering (FPO) as well as underwriting agreement for declaration of bonus issue by listed entities and preconditions for issuance of bonus issue. .

Apart from this, SEBI has proposed to include certain requirements regarding disclosures to be made in the offer document. These disclosures require issuers and lead managers to make access to material agreements and documents available for inspection through online means other than inspection at the registered office.

Also they should make available the complete industry report as part of the material documents for inspection both offline and online and display the draft offer document and offer document on the website of the issuer company.

The IPO preparer wishes to underwrite the issue to cover the undersubscription in the issue and must comply with certain conditions before filing a Red Herring Prospectus (RHP). Such issuers should enter into an underwriting agreement specifying the maximum number of securities specified therein either by themselves or by receiving subscriptions at a predetermined price not less than the issue price, the consultation paper said.

If an underwriting agreement is entered into after the closing of the issue to cover the fall in demand without disclosure in the RHP, it is not fair to the investors, as this information was not made available to the subscribing investors while applying for the IPO. Sebi has said that. SEBI has invited comments from the public on these proposals till March 8.