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Tuesday, June 24, 2014

Fund raising via preferential allotment dips 59.8% in January-April 2014

Total numbers of preferential issues were higher at 137 in January-April 2014

Fund raising of listed companies via preferential allotment of shares to promoters and shareholders has declined 59.8% to Rs 7073 crore in January-April 2014, compared to Rs 17612 crore in January-April 2013. 

However, the total numbers of preferential issues were higher at 137 in January-April 2014, as against 122 in January-April 2013. 

On preferential basis, the companies raised Rs 809 crore in January 2014, Rs 686 crore in February 2014, Rs 2418 crore in March 2014 and Rs 3160 crore in April 2014. 

The SEBI board at its meeting in the last week has decided to replace 'closing price' with 'volume weighted average price' in the pricing formula for preferential issues. Further, SEBI board also extended the regulations concerning pricing of QIPs that take into account the effect of stock split, bonus, etc and regulations specifying the pricing methodology in case of infrequently traded shares to preferential issues. 

The revised change to preferential allotment norms is expected to prop up the issue of shares on preferential basis.
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