Market regulator SEBI’s proposal to ease listing norms for technology start-ups has got a thumbs up from industry firms, start-ups and investors.
The changes proposed in SEBI’s recent discussion paper are expected to not only encourage younger companies to list on the bourses but also give a major fillip to the angel investment ecosystem in the country.
A cross section of industry insiders felt that SEBI should tweak the fund raising norms of bourses in addition to relaxing rules related to the Institutional Trading Platform.
Says Rehan Yar Khan, Founder, Orios Venture Capital: “These are baby steps taken by SEBI and are welcome. I think, this year not too many companies will go for the IPO as few start-ups are mature enough to raise money from capital markets. They will wait and watch for 2-3 years”.
Among the norms SEBI said it could relax is India’s requirement for a lengthy lock-in period of up to three years for a “promoter” investor who holds at least 20 per cent. That has been reduced to a minimum of six months.
The new norms, if approved, could take some of the pressure off start-ups, allowing them to focus more on innovation, said Sanjay Mehta, an angel investor.
Hanuman Tripathi, Managing Director of Infrasoft Technologies, said that industry bodies Nasscom and iSpirt have played a pivotal role behind the scenes.
“There will be a lot of freshness in the market. Investors will get to deal with more innovative and attractive companies in addition to large listed firms. More, importantly, a new community of companies will come into the market,” Tripathi added.
Ending the exodusSharad Sharma, spokesperson at iSpirt, said: “The objective was to stop the mass exodus of start-ups to foreign exchanges, mostly NASDAQ. India has witnessed a wave of technology-driven new-age companies in the last 6-7 years. These are young entrepreneurs who are putting their sweat equity and hence SEBI should approach these companies in a different way and deal with them in a different manner. This is the right time for SEBI to start thinking about start-ups.”
SEBI has also relaxed rules on the level of disclosure firms need to have on how funds will be used. It said, moreover, that the issue price could be decided on the basis of metrics other than earnings per share and price-earnings ratio, given that few start-ups are profitable yet.