SEC revises IPO share allotment criteria

Ravi LADDUWAHETTY

The Securities and Exchange Commission (SEC) yesterday revised its criteria for the allotment of shares for Initial Public Offerings, giving wider scope and ownership for the retail investors.

The regulations which were revised yesterday allow retail investors being entitled to 40% of the allotted shares or shares to the value of Rs 1.5 billion in the event of an Initial Primary Offering being of a minimum value of Rs 3 billion and above. The earlier regulation was that retail investors were entitled to 40% of the shares and Unit Trusts 10%, irrespective of the size of the IPO.

The move was also welcomed by the corporate community and especially Registrars to IPOs.

This is a positive move by the SEC which gives better leverage to retail investors, SSP Corporate Services Managing Director and CEO Kishan Kuruppu told the Daily News Business yesterday.

He said there were limitations to the number of institutional investors who were keen on mega buck IPOs as there were limitations in the number of shares that they could muster and which also gave more room for retail investors.

He said there was a need to have around 100,000 retail investors required to fill up an IPO and that did not get subscribed if the institutional investors blocked the issue.

"There are also small retail investors who subscribe for small numbers of shares numbering between two and five thousand as well and this move will also give them more leverage for ownership of shares," Kuruppu said.