Sebi set to relax OFS framework
: The Securities and Exchange Board of India (Sebi) is set to relax rules governing offer for sale (OFS) to aid the government’s disinvestment process. This will be on the agenda of the Sebi board when it meets on 13 December, two people with direct knowledge of the matter said.
The regulator is also planning to spare non-banking finance companies (NBFCs) from having to disclose changes in shareholding because of encumbered or pledged shares, the people cited above said on condition of anonymity. The move assumes relevance since mutual funds have increasingly started lending to group companies of NBFCs and HFCs against share pledges. The Sebi move is expected to offer some relief to stressed housing finance companies and systematically important NBFCs.
Sebi will also mandate more disclosures from promoter groups which was earlier mandated only for promoters and key managerial personnel (KMP), the two people added. These steps are in addition to Sebi considering de-risking of liquid funds in aftermath of Infrastructure Leasing and Finance Services (IL&FS) crisis and easing of start-up listing processes.
“Sebi is considering to expand the current norms for OFS by allowing companies with more than ₹1,000 crore of market capitalization to raise funds via this route. This is based on a representation from DIPAM (department of investment and public asset management (DIPAM),” said the first of the two people quoted above.
Currently, OFS is available only to top 200 companies by market capitalization in any of the last four completed quarters. With this change, OFS would be available to at least 800 companies, according to market capitalization data on BSE. If the changes goes through, companies such NLC India Ltd, Housing and Urban Development Corp. Ltd (HUDCO), SJVN Ltd, Kudremukh Iron Ore Companyor KIOCL Ltd can raise funds or reduce government holding via OFS.
With over four months left for the fiscal to end, DIPAM is fasttracking the process to achieve the disinvestment target of ₹80,000 crore. So far, the government has mopped up over ₹15,200 crore from public sector undertaking (PSU) stake sale through public offers, OFS and through CPSE ETFs.