The Capital Markets Regulator, SEBI vide its Circular dated January 5, 2018 mandated the use of EBP platform for private placement of Securities (debt securities and NCRPS) for the issue size of Rs.200 Crores or more. It is a user friendly system aimed to help the market participants for better price discovery and transparency in the overall process of fund raising.
Now, SEBI has vide it’s another Circular dated August 16, 2018 has provided for some additional options/ clarifications in the EBP mechanism. These shall be effective from October 1, 2018.
The brief analysis of the additional options/clarifications is presented below:
| Sl. No. | Heads | Present Scenario | Post October 1, 2018 | Remarks/ Impact |
| 1. | Mode of Bidding dissemination | Only Open bidding System is allowed, Â i.e. Real Time dissemination of the bidding on the platform and bids are visible to everyone. Â |
Open and closed bidding System both will be allowed at the option of issuer and same shall be disclosed in the Private Placement Memorandum (PPM)/ Information Memorandum (IM). | Now the issuers will be allowed to choose a closed bidding option by mentioning the same in the PPM/IM; If the closed bidding is opted for, no bids will be displayed on the platform during the bid period. They will be displayed on the platform only after the closure of the bid period. |
| 2. | Multiple yield allotment | Only uniform Yield allotment were allowed. | Now issuer can choose either uniform yield or multiple yield allotment for the particular issue. | Multiple yield allotment means that within a single issue, the Allotment can be made on different yields if the same is provided in the PPM/IM. |
| 3. | Multiple bids by an investor | Multiple bids are not allowed by single bidder. | Now investors will be allowed to put multiple bids individually for the particular issue. | The same shall be provided in the PPM/IM |
| 4. | Allotment on yield-time priority basis | Only Yield Priority basis is allowed. For same yield, pro rata basis allotment is done.  |
Now Allotment will be possible on Yield-time priority basis as well. |
Priority order for allotment shall be:
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| 5. | Pay-in of funds through escrow bank account of issuer |
Only Clearing Corporations are allowed to receive the  funds from the investor and after corporate action, the funds are transferred to the issuer | Now the Pay in will be allowed to be done directly to issuer escrow account or to the clearing corporation at the option of the issuer. The amount can be transferred to issuer after confirmation from RTA and corporate action in the respective depositories.   |
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| 6. | Time of Pay- in | Only T+1 T being the bidding closure date |
Now T+1 and T+2 allowed T being Bidding closure date |
Presently, successful bidders are supposed to pay-in on the very next day of the bidding. W.e.f. October 1, 2018, an option for T+2 is also provided along with T+1, corporate action and fund release will be done as per selected settlement cycle. |
| 7. | Depositories to act as EBP provider | Only Stock exchanges are allowed to set up an EBP platforms | Now Depositories will also be allowed to setup an EBP platform  | This will give issuers an additional option to select the EBP provider. |
The revisions are aimed at streamlining the processes, enhancing transparency and encouraging other asset classes to use EBP.
For more details regarding EBP Mechanism and abovementioned circular, let’s talk.
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Ms. Anjali Aggarwal
Partner
anjali@indiacp.com
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