SEBI Targets Streamlined Rights Issues as Top Fundraising Choice

SEBI proposes enhancing rights issues as the preferred fundraising method by streamlining processes, shortening timelines, and allowing selective investor allotments to increase efficiency and adoption.

Vinayak Hagargi
August 20, 2024
7:17 pm
1 min read

SEBI has released a consultation paper aimed at making rights issues the preferred method for raising funds. The paper, issued on August 20, seeks feedback from stakeholders on several recommendations designed to expedite and enhance the rights issue process, offering greater flexibility in investor allotment.

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The consultation paper highlights the current state of rights issues, which raised the least amount of funds in FY24, totaling ₹15,110 crore. This is significantly lower compared to the ₹68,972 crore raised through Qualified Institutional Placements (QIPs) and ₹45,155 crore through preferential allotments. The paper aims to address this disparity.

To boost the use of rights issues, SEBI held consultations with stakeholders in July, resulting in several key proposals. These proposals focus on streamlining the process, making it more efficient and appealing to both companies and investors, thereby increasing its adoption.

Key proposals in the consultation paper include eliminating the requirement to file a Draft Letter of Offer (DLoF) with SEBI, simplifying the Letter of Offer (LoF) to include only essential information, and reviewing the role of intermediaries in the process.

Additionally, the paper suggests reducing the timelines for completing a rights issue and allowing selective allotment of shares to investors in rights issues.

Vinayak Hagargi

Vinayak is a passionate financial markets enthusiast with 4+ years of experience. He has curated over 100 articles simplifying complex financial concepts. He has a unique ability to break down financial jargon into digestible chunks. Vinayak aims to empower newbies with relatable, easy-to-understand content. His ultimate goal is to provide content that resonates with their needs and aspirations.

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