The securities and exchange board of India (Sebi) has tightened rules around private debt placements by making the electronic book platform compulsory for all issues of Rs 20 crore or more. The move is aimed at improving transparency and streamlining the fundraising process.Previously, the electronic book mechanism was only mandatory for issues of Rs 50 crore or more. But under the new framework, it will now apply to private placements of debt securities, non-convertible redeemable preference shares (NCRPS), and municipal bonds, including single, shelf, and follow-on issues within a financial year, as per a circular by Sebi.The regulator also widened the scope of the electronic book provider (EBP) platform to include real estate investment trusts (REITs) and infrastructure investment trusts (InvITs), which were previously not covered under any specific regulatory framework.“An issuer, if desirous, may choose to access EBP platform for private placement of securitised debt instruments or security receipts or commercial papers (CPs), certificates of deposit (CDs) and issuers constituted as REITs, SM REITs and InvITs can also access the EBP platform for private placement of units of REITs, SM REITs and InvITs,” the board said on Friday.Issuers must now submit the placement memorandum and term sheet at least two working days prior to the opening of the issue, or three working days in advance if they are using the EBP platform for the first time. These documents must include base issue size and any green shoe option, capped at five times the base size. Details of past green shoe allocations must also be disclosed.Sebi has also introduced provisions for anchor investors, depending on the credit rating of the instrument. Issuers can now reserve up to 30% of the issue for AAA to AA- rated instruments, 40% for A+/A-, and 50% for lower-rated ones. Anchor investors must confirm participation electronically one day before the issue, with any unconfirmed portion reallocated to the general issue.To promote fairness, Sebi said that where multiple bids are received at the same cut-off price, allotments must be made on a proportionate basis.The EBP platform is also required to publicly update bidding details and issue-related information on its website either by the end of the bidding day or by 1 PM the next day, depending on when the bidding closes.Further, new timelines have been laid out for obtaining in-principle approval from stock exchanges, by T-2 or T-3 for EBP-based issues and before the opening date for non-EBP issues.While most changes take immediate effect, Sebi said those related to anchor investors, disclosures, and reporting will take effect over the next three to six months.
