Market regulator Sebi today allowed major non-banking finance companies (NBFCs) to be eligible for quota reserved for qualified institutional buyers in IPOs, bringing them at par with banks and insurers. The move is expected to strengthen the IPO market and channelise more investments.The Sebi board has approved a proposal for inclusion of systemically important NBFCs registered with the RBI having a net worth of more than Rs 500 crore in the category of qualified institutional buyers (QIBs). As NBFCs are well-regulated entities, classifying such NBFCs under the definition of QIBs will give issuers access to a larger pool of funds, the regulator noted.
Institutions such as banks and insurance companies are categorised as QIBs by Sebi and are eligible for participation in initial public offers (IPOs) with specifically earmarked allocation. Earlier, Finance Minister in his Budget speech for 2017- 18, had proposed to allow systemically important NBFCs regulated by the RBI and above a certain net worth to be categorised as QIBs as it would strengthen the IPO market and channelise more investments.Further, Sebi’s board has approved amendments to the debenture trustee regulations after taking into consideration suggestions from stakeholders.
Earlier, the regulator had initiated a public consultation process for changes to the debenture trustee regulations under which an entity will not be prohibited from acting as a trustee if the government provides guarantees for the debenture issued. The amendments will fortify the existing provisions to enable the DTs to perform the task of securing the interest of investors and also harmonise the existing provisions with those of the Companies Act, 2013.