SEBI allows PE for start-up IPOs
28 Aug 2012 7:09 AM IST
With an aim to help companies set up by professionals and qualified entrepreneurs to tap capital market, the market regulator, Securities and Exchange Board of India (SEBI) has allowed them to get help from PEs and other funds to meet share lock-in requirements.
As per regulations of SEBI, promoters are required to lock-in at least 20 per cent stake in the company for at least three years after allotment of shares in IPO. Besides, any holding in excess of this minimum 20 per cent promoter stake is required to be locked in for one year.
To encourage professionals and technically qualified entrepreneurs who are unable to meet the requisite 20 per cent contribution by themselves as promoters, the regulator has now decided to allow such start-up promoters to meet this requirement with help of SEBI-registered registered AIFs.
AIFs or alternative investment funds are a newly approved class of investors which include private equity, SME, Infrastructure, venture capital funds, among others. However, the contribution of these AIFs would be capped at 10 per cent to meet the promoter share lock-in guidelines. The proposal has been approved by the SEBI board and would be soon incorporated into the relevant guidelines.
SEBI is of the view that such a step would encourage the professional and first-generation entrepreneurs to tap the capital market to raise funds. The decision was taken after a recommendation in this regard by SEBI Primary Market Advisory Committee.
As per regulations of SEBI, promoters are required to lock-in at least 20 per cent stake in the company for at least three years after allotment of shares in IPO. Besides, any holding in excess of this minimum 20 per cent promoter stake is required to be locked in for one year.
To encourage professionals and technically qualified entrepreneurs who are unable to meet the requisite 20 per cent contribution by themselves as promoters, the regulator has now decided to allow such start-up promoters to meet this requirement with help of SEBI-registered registered AIFs.
AIFs or alternative investment funds are a newly approved class of investors which include private equity, SME, Infrastructure, venture capital funds, among others. However, the contribution of these AIFs would be capped at 10 per cent to meet the promoter share lock-in guidelines. The proposal has been approved by the SEBI board and would be soon incorporated into the relevant guidelines.
SEBI is of the view that such a step would encourage the professional and first-generation entrepreneurs to tap the capital market to raise funds. The decision was taken after a recommendation in this regard by SEBI Primary Market Advisory Committee.
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