For private placement of debt issues, e-book made a must

Stock exchanges have been allowed to act as electronic book (e-book) providers for primary debt market offerings through private placements.

Deciding this in its board meeting on Monday, securities regulator SEBI said the electronic book mechanism would be mandatory for private placement of bonds above ₹500 crore but voluntary for private placements with a single investor.

Leaving the minimum bid size for institutional investors to issuers, SEBI mandated that companies have to provide draft placement memorandum (offer document) without incorporating coupon details.

Tejesh Chitlangi, Partner, IC Legal, said, “This move will improve transparency, better price discovery mechanism and provide more depth in the system.”

Electronic book providers have to provide all bids/ application to the issuer after end of bidding, besides disclosing aggregate volume data on anonymous basis to avoid any speculation.

Unveiling the salient features of green bonds, SEBI said the requirement of an independent third party validator, for certifying the pre-issuance and post-issuance process including project evaluation and selection criteria was optional.

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“The proposal with respect to issuance of green bonds may lead to a spurt in investments in environment-friendly projects and also assist the country in reducing the carbon footprint and comply with international best practices,” Chitlangi said.