Mumbai: In a bid to enhance the participation of retail investors in public issues, the Securities and Exchange Board of India (Sebi) on Wednesday relaxed bidding norms for floats in which shares are allotted to the retail investors at a discount to the price for institutional ones.
Sebi allowed investors eligible for differential pricing in public issues to make their payment at a discounted price for the shares they bid for at the time of bidding itself.
There have been several public issues where the retail investors are offered shares at a discount to the price at which the institutional investors are offered shares. Currently, the effect of such differential pricing or discounts in a public issue is given to the eligible investors only at the stage of allotment of specified securities and not at the time of filing an application for such allotment.
“This takes away certain benefits from the investors such as lower cash outflow at a price net of discount, the ability to apply for more shares with the same cash outlay, etc” the markets regulator said.
Retail investors are allowed to invest Rs2 lakh in a public issue. For the ease of calculation by investors, Sebi asked the issuers to state the discount to the issue price in absolute rupee terms.