Electronic Initial Public Offers (e-IPOs) allow investors to bid for shares through internet. India's IPO market has been rather sluggish over the past few years and in spite of the buoyancy seen in the secondary market over the past one year or so, primary market activities remain slow.
The Securities and Exchange Board of India, Sebi, has come up with a series of investor-friendly measures trying to perk up the primary market and give a fillip to fund raising from capital markets. E-IPO is part of that initiative. The market regulator had released a set of draft guidelines earlier in January to get inputs from various stakeholders.
The market regulator feels e-IPO can help cut cost and paperwork in public issuances to a great extent as it will not require printing of application forms and will help companies reach out to retail investors in small towns.
Sebi has of late been focussing on extensive and integrated use of technology to facilitate and further ease the investors process in the securities market. Under the new norms, investors may also get SMS/email alerts on allotment under the IPO on the lines of alerts being sent to investors for secondary market transactions.
E-IPOs are also expected to reduce the timeline of the entire process drastically, facilitating listing of shares within two-three days of the close of subscription. At present, it takes up to 12 days for IPO shares to get listed following subscription.
As per the buzz in the market, e-IPOs will initially allow investors to place bids through the internet and by using broker terminals across the country against the current practice of filing long documents.
Sebi's board, which is expected to meet later this month, is likely to vet the final e-IPO norms, which have already been finalised after taking into account suggestions from various stakeholders. The board is also expected to consider a framework for the use of mobile applications for making bids in public issues.
Sebi chairman UK Sinha last weekend said that the regulator would soon start electronic IPO, which would make it easier for investors to put their money in the initial public offers.
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