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The norms for issuing non-convertible securities (“Securities”) through the electronic book provider (“EBP”) mechanism have been revised.
The key changes being:
1) The threshold for applicability of EBP mechanism has been lowered from INR 100 crores to INR 50 crores. Thus, bidding through EBP mechanism shall be mandatory in case of:
(a) single issuance of INR 50 crores or above;
(b) shelf issuance where the aggregate of all issuances exceeds INR 50 crores; OR
(c) any subsequent issue of Securities that aggregates the total issue size to more than INR 50 crores in a financial year.
2) It is clarified that the green shoe option for the issue of Securities cannot exceed 5 times of the base issue size.
3) The bidding process to be determined on the basis of best bid being offered in terms of price or coupon instead of being determined on the first come first serve basis.
4) Additionally, to ensure the subscription to the pre-targeted investors while issuing Securities through EBP mechanism, a concept of ‘anchor investor’ is introduced wherein the issuer may provide an option to the anchor investor to subscribe up to 30% of the base issue size of the total issue which shall be excluded from the bidding process on the EBP platform. Such portion of the issue size shall be reserved for such anchor investor to subscribe. The anchor investor shall be permitted to bid through the EBP mechanism for the remaining issue size.
The above changes were introduced by the Securities and Exchange Board of India vide its circular dated 10th October 2022. This will be applicable to issuances made from 1st January 2023.
For further details, please see:
SEBI | Review of provisions pertaining to Electronic Book Provider platform – Replacement of Chapter VI to Operational Circular dated August 10, 2021
For any queries / clarifications, please feel free to ping us and we will be happy to chat:
• Ms. Apurva Kanvinde (firstname.lastname@example.org)• Mr. Smit Parekh (email@example.com)