Bangalore: India’s market regulator has eased the norms for preferential allotment of shares by some companies, a move that should help fraud-hit outsourcer Satyam Computer Services to find a strategic investor.
The Securities and Exchange Board of India (Sebi) said its rules on pricing of preferential share issues would not be applicable to companies that have been granted exemption by the regulator.
Preferential allotment of shares are usually at the average price of a company’s stock over six months, or two weeks, whichever is higher.
The regulator said this rule would not be applicable to a company where the Sebi board had granted relaxation for “substantial acquisition of shares and takeovers”. Sebi’s statement, which was issued late on Tuesday, can be found at:
On 13 February, Sebi had said it would ease takeover rules in certain conditions. It did not say specifically how it would change the rules or mention Satyam, saying it would consider plans submitted by a target firm that met it requirements for an exemption.
Last week, Satyam won approval from the Company Law Board to increase its authorised share base and bring on board a strategic investor through a competitive auction, with the option to also make a preferential issue of shares.
Satyam has been struggling for survival since 7 January, when its founder and chairman Ramalinga Raju quit after disclosing that profits had been overstated for years at the New York-listed outsourcing firm in India’s biggest corporate scandal.
The outsourcing firm is looking for a buyer to help restore the confidence of its more than 600 clients and about 50,000 staff.
Satyam, which counts General Electric, Cisco and Qantas Airways among its clients, is likely to find a strategic investor in about two months, the outsourcing firm said in a staff newsletter.
Potential suitors for Satyam include India’s top engineering and construction firm Larsen & Toubro, Hinduja Group and Spice Group.
Earlier this month, the Sebi had said it would change its rules on mandatory open offers to buy shares in firms after an approach from Satyam’s new government-appointed board.