Corporates giants like Gas Authority of India (GAIL),
Konkan Railway Corporation (KRC), LIC Housing Finance,
Krishna Bhagya Jala Nigam (KBJNL) and Cauvery Neeravary
Nigam (CNNL) will have to delay their plans to tap the
capital markets due to the recent guidelines on private
placements issued by Securities and Exchange Board of
India (SEBI). It is estimated that over Rs 1,800-crore
worth of bond issues are currently being held up.
were meant for various infrastructure projects and include
the Rs 500-crore issue of GAIL and Rs 550-crore issues
each of KBJNL, CNNL and other state-owned bond issuers,
including the Andhra Pradesh-owned enterprises.
in its recent guidelines issued on 30 September, said
debt securities issued on a private placement basis by
listed companies and sought to be listed on a stock exchange
have to carry a credit rating of "not less than investment
grade" from an agency registered with the market
regulator. The SEBI circular stated that these norms have
been issued by the markets watchdog to provide greater
transparency to such issuances and to protect the interest
of investors in such securities.
official with UTI Bank's merchant banking division said
as per the new SEBI guidelines, the corporates have to
follow all the procedures applicable for an equity issue
or an initial public offer issue of the corporates. "The
charm of private placement issues is that the required
funds become available within a span of a few weeks. The
new SEBI norms are very complex and the private placement
issue of corporates will take the same as required for
an equity issue. Due to this, we are facing a delay in
arranging funds for corporates like GAIL."
KRC finance director R K Sinha: "The procedures prescribed
in the new SEBI guidelines will delay the fund mobilisation
programme of the corporates. But SEBI still allows the
corporates to go for one-to-one arrangement of funds from
creditors." But merchant banking sources say the
bond issuer can mobilise only a small portion of the required
capital through a one-to-one arrangement.
state-owned institutions have already sought clarifications
on the recent SEBI circular, which tightens debt private
placement norms. According to an official with Darashaw
Equity Research, the corporats have sought several details
on whether the offer document has to be filed with SEBI
before floating a debt placement and whether an investment
banker has to vet the offer document.