Sebi mandates e-book mechanism for pvt debt securities above Rs 20 crore

New Delhi: Markets regulator Sebi has made the electronic book mechanism mandatory for all private placement debt issues of Rs 20 crore or above and expanded the platform's scope to include REITs and InvITs.

The move, based on recommendations from a working group and public feedback, is aimed at enhancing the efficiency of the Electronic Book Provider (EBP) platform.

Under the new framework, the use of the EBP platform is now mandatory for private placements of debt securities, non-convertible redeemable preference shares (NCRPS), and municipal bonds, where the issue size is Rs 20 crore or more, including single, shelf, and subsequent issues within a financial year, according to a Sebi circular.

Earlier, the mechanism was mandatory for all private placements of debt securities with an issue size of Rs 50 crore or more.

Sebi has extended products on the EBP platform to infrastructure investment trusts (InvITs) and real estate infrastructure trusts (REITs). Before that, there was no specific regulatory provision.

"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," Sebi said on Friday.

The regulator said that issuers are required to submit the placement memorandum and term sheet -- containing key terms and conditions -- at least two working days before the issue opens, or three working days in the case of first-time users of the EBP.

The documents must disclose the base issue size and any green shoe option, which is capped at five times the base size. Besides, past green shoe allocations are required to be disclosed.

Depending on the credit rating of the instrument, issuers can reserve a portion of the issue -- up to 30 per cent for AAA to AA-, 40 per cent for A+/A-, and 50 per cent for others -- for anchor investors, who will have to confirm their participation electronically one day before the issue.

Further, unconfirmed amounts will be reallocated to the base issue.

To ensure transparency, Sebi said that if multiple bids are received at the same cut-off price, allotments must be made on a proportionate basis.

The EBP is required to publicly update detailed bidding and issue-related information on its website by the end of the bidding day or by 1 PM the next day, depending on when the issue closes.

Additionally, revised timelines have been introduced to obtain in-principle approval from stock exchanges before T-2 or T-3 for EBP-based issues and before the issue opens for non-EBP issues.

These changes will come into effect immediately, except for certain clauses, including those related to anchor investors, disclosures, and reporting, that will be implemented three to six months from the circular's date.