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Expert sheds light on why preferential issues are under SEBI scanner

Updated : July 14, 2021 14:25:14 IST

The PNB Housing Finance’s preferential allotment to Carlyle and related buzz around it has put a spotlight on other companies planning similar issues as well.

CNBC-TV18 has learned that the Securities and Exchange Board of India has asked exchanges to examine preferential issue proposals of LIC Housing Finance and Barbeque Nation. A preliminary inquiry has been initiated by the market regulator.

In an interview with CNBC-TV18, Vikram Raghani, partner of J Sagar Associates, spoke at length about what the main bone of contention is and what needs to be done to avoid regulatory action.

“We do not have much colour on the LIC Housing Finance issue, but if it is similar to PNB Housing Finance then the main issue is that SEBI believes that in addition to computing the pricing for the preferential issue, as per its own regulations, these companies ought to have taken valuation report from a registered valuer because the articles of these companies have such a requirement. Therefore, when a listed company makes a preferential issue of shares, the pricing is determined by SEBI’s regulations,” he said.

For the entire interview, watch the video.
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