Subprime not lone cause for swings: Damodaran

M Damodaran, chairman, Securities and Exchange Board of India (Sebi) today ruled out the US subprime crisis as the single cause for the swing in markets, and also ruled out any separate regulation for hedge funds.

Damodaran said the regulator would prefer hedge funds coming to the Indian markets directly than through offshore derivatives. He said registration of hedge funds with Sebi, as in the case of foreign institutional investors, would be enough.

He pointed out that Sebi was not worried about the large number of players coming to India because their entry pre-supposes the constant returns being offered by the Indian markets besides a sound market regulatory mechanism.

He said Sebi would soon issue guidelines for setting up a self-regulatory organisation (SRO) for investment advisors including brokers and the print and the electronic media.

"A single organisation covering all sets of investment advisors is going to be effective," he said while ruling out multiplicity of self-regulatory organisations.

The purpose of self-regulation is to see that the advises on investments are given professionally and in a transparent way, Damodaran added.

Oracle not to delist i-flex for 5 more yrs

To consider open offer if price falls below Rs 2,100 a share.

Stung by the lukewarm response to its earlier open offer to buy i-flex shares, US-based Oracle has maintained it has no plans to come out with additional open offers for i-flex shareholders for at least the next five years. In a recent filing with the US Securities and Exchange Commission, however, it added a rider stating it may think of an open offer if the share price is below Rs 2,100 per share — its offer price of December 7, 2006.

Oracle holds 83 per cent of i-flex’s shares and has been consistently trying to acquire the rest in a bid to delist i-flex from the Indian bourses. It would require a little over 90 per cent of shares to do so. The move will help it to integrate i-flex with its business worldwide.

Under current norms, if the minority shareholders do not surrender shares willingly to the new promoter, the Securities and Exchange Board of India’s (Sebi’s) takeover code requires the new promoter to come out with a proposal to buy back the rest of the shares from the minority shareholders under a proposal to delist the company.

Read more in Business Standard

Sebi okays short selling by institutions

The Securities & Exchange Board of India (Sebi) today tightened the norms for initial public offerings (IPOs) by real estate companies, while allowing short selling of equities by institutional investors, including FIIs.
It also made grading mandatory for all IPOs and waived the requirement of minimum public holding post-IPO for public sector companies and institutions.

The stock market regulator said real estate companies looking to tap the market must show the current value of their landholding, which should only include land actually owned by them.

A large number of real estate companies have lined up IPOs. Many have computed the value of their land on basis of what they expect the price to be when the projects are completed.

When approached for comments on Securities & Exchange Board of India’s directive, a senior executive with Delhi-based DLF said, “This will work to our advantage. The cost of land has been escalating and we will now be able to do the valuation at today’s prices.”

DLF has been awaiting Sebi’s permission to float an IPO that is estimated to garner Rs 13,600 crore, more than any issue so far.

Read more at Business Standard

SEBI makes IPO grading mandatory

Market regulator Securities and Exchange Board of India (SEBI) on Thursday made it mandatory for companies planning initial public offers to get rated by agencies and tightened disclosures for real estate IPOs.

The two decisions could affect some high-profile IPOs being planned by big developers, bankers said.

"The grading of IPOs will come into effect immediatly," SEBI Chairman M Damodaran said. "The fees to be paid for grading of IPO would be paid by companies," he said.

Read more at The Financial Express

Sebi to allow short-selling by institutions

Sebi chairman M Damodaran said in Mumbai this evening that the board, which met today, has approved a proposal to allow short-selling by institutions.

The board also approved a proposal for mandatory grading of IPOs, which will be reviewed periodically.

On real estate IPOs, Damodaran said land bank details should be accompanied by ownership status, and valuations should be based on current prices.

On delisting via the book-building process, Damodaran said a final decision on the issue would be taken at the next board meeting scheduled in May.

Direct entry for hedge funds

The lure of the much-feared participatory notes, through which hedge funds now invest in the Indian stock markets, may soon wane.

The Securities and Exchange Board of India (Sebi), the capital markets regulator, has for the first time directly invited hedge funds to register with it and participate in the Indian stock markets without the cover of participatory notes.

Participatory notes are often seen as tools for money laundering and there have been numerous calls, including from the Reserve Bank of India, to curtail them.

Read more at Business Standard