Fund raising by companies big and small by going public on the stock exchanges has been on the rise over the last few years. So much so that India now ranks on top in total number of IPOs. The Securities and Exchange Board of India wants to simplify and ease things further for new companies looking to list. In that endeavour, the market regulator will soon come out with what it calls demystified offer document for companies.
"We think too much mystery has been created around this thing called DRHP (draft red herring prospectus) and this whole process of getting listed. It actually isn't that complex. So, what we are creating now is to create a template fill in the blanks IPO document, which says you fill in these blanks, if you have any complexity in filling it up, then there is a separate column there, in which you articulate that complexity," SEBI Chairperson Madhabi Puri Buch said on Friday.
She was speaking at the annual capital market conference of industry body FICCI. According to Buch, the document will be precise as well as meaningful and make life lot easier for companies who are waiting to list on stock exchanges.
"It will smoothen the processing time within SEBI itself; we are hoping we will bring down the approval time even more than what we have today and at the same time, it will demystify the entire process of filing and going through a listing process," Buch said.
Not just IPOs, the regulator is also looking to make raising funds easier for companies that are already listed. Today, many companies look to raise money via rights issue of shares or preferential allotment of shares. SEBI is planning a new product that will be a combination of sorts.
"A new innovation brought forward by the SEBI team is a combo product of a rights issue and preferential allotment. What this is going to achieve is quite transformational, get the best of both worlds. You gets the best of a rights issue, you get the best of the preferential allotment," said the SEBI chief.
While this new product is still a work in progress, according to her, the entire end-to-end process could be completed in 23 days as compared to even preferential allotment, which despite the speed still takes 42 days.
"We should now create this equivalent of eastern express highway to be able to do fund raising in a way that is fast, cost effective and at the same protects the investor, because its the right way to preferential allotment," Buch said.
As such SEBI has begun speeding up a lot of its processes in recent times, with the use of new technology and tools, including AI.
The regulator has already implemented AI within SEBI for processing public documents, for instance a REIT (real estate investment trust) or an InvIT (infrastructure investment trust) annual report. Earlier, an employee at SEBI would go through the entire document to check compliance. That now is being largely done by using AI, which an officer then validates post some manual checking. Nearly 80 per cent of the work is being done by AI, said Buch. SEBI is also working on AI-based processing of IPO documents.