India's capital markets regulator on Thursday unveiled a series of measures to attract investors and boost confidence in the stock market.
The Securities and Exchange Board of India (SEBI) approved the "anchor investor" concept under which an investor can subscribe to up to 30 percent of the quota for institutional investors in an initial public offering, said Chairman C.B.Bhave.
"This is in response to (the) requests of issuers that there was a need for investors with prior commitment who will enhance their ability to sell the issue and bring more confidence," Bhave told reporters after a board meeting.
Under the new rules, an anchor investor would pay 25 percent of the total investment at the time of applying for the initial public offering, and the balance within two days of the closure of the issue.
Such anchor investors would have to adhere to a lock-in period of one month from the date of the share allotment.
Earlier this year, the regulator amended rules for declaring the price band of initial public issues and changed its rules on mandatory open offers in a drive to make the capital markets more investor friendly.
Bhave said SEBI had also decided to rationalise disclosure in the rights issues offer documents as information relating to the listed company offering such an issue was already available in public domain for investors.
In a rights issue, a company issues new shares to existing shareholders. Analysts say the upturn in the stock market is expected to see many firms rushing to tap this route to raise finances for either cutting debt or to fund expansion plans.
"The revised disclosure would make the process of rights issue faster for companies and also reduce overall costs for such issues," said a SEBI statement.
The market regulator also said entry load for investments in mutual funds would be removed, which is expected to result in increased participation. It would also cut registration fees for market intermediaries by about 50 percent.
VCCircle Adds- The board of the market regulator has also slashed fees for various members like foreign institutional investors (FII) and foreign venture capital investors (FVCI) with others like brokers, mutual funds, custodians. The application and registration fees for FCVI (foreign PE & VC firms) has been cut by half to $2,500 and $10,000, respectively. Same holds for FIIs, where registration fee has been cut to $5,000 and that for sub-account of FIIs is now $1,000.