Capital markets regulator Securities and Exchange Board of India (SEBI) is exploring the introduction of special purpose acquisition companies (SPACs) in India.
SEBI Chairman Ajay Tyagi on Wednesday said the market regulator’s Primary Market Committee is deliberating if SPACs should be introduced in India.
SPACs are companies formed to raise capital via an initial public offering (IPO) to acquire a private business later and take it public.
Speaking at FICCI's annual Capital Market Conference, Tyagi said, "SEBI’s Primary Market Advisory Committee is deliberating on whether a framework for SPACs should be introduced in India and if yes, given certain concerns being raised on such vehicles, with what safeguards."
Sebi has few other proposals in the pipeline that are in the early discussion stage – IPO reforms on the book building & fixed price framework and provisions relating to price band and further reforms on preferential issue-being some of them, he informed
Tyagi also said that the mandatory disclosures by companies "must not be treated as checkboxes".
"Disclosures by many companies are lacking in some areas. Documents are as important as annual reports, financial results should have the quality investors deserve. Companies must follow the rule of disclosing material events in letter and spirit," Tyagi said.
He added that SEBI is examining the minimum shareholding and public float at a concept level. “As of now minimum public shareholding requirement is 25 percent irrespective of whether it is a promoter-held company or widely held. We don't intend linking the two or increasing the limit of 25 percent minimum public shareholding,” Tyagi said.
The SEBI Chairman said the framework for the minimum public shareholding has been revised to make it easier for large companies to launch IPOs. "Focus on review of equity fundraising norms will continue in future,” he added.
He said that the nature of investors from whom corporates are raising money has changed. Several new-age companies are seeing rapid growth, leading to public listings.
"The proportion of IPOs being used to give exit to investors is higher than that for raising funds. Actual funds raised by corporates has gone up significantly," he said.