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Simplified Framework for Capital Raising by technological start ups - INSTITUTIONAL TRADING PLATFORM

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Simplified Framework for Capital Raising by technological start ups - Institutional Trading Platform

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Simplified Framework for Capital Raising by technological start ups - INSTITUTIONAL TRADING PLATFORM

  1. 1. iSPIRT – Indian Software Product Industry Round Table is a non-profit think tank formed by leading practitioners of the industry to assist in the cause of building a healthy, globally-competitive and sustainable industry. Visit www.ispirt.in for more details. Simplified Framework for Capital Raising by technological start ups INSTITUTIONAL TRADING PLATFORM
  2. 2. Need for a separate platform  Large number of technology intensive start-ups in India with disruptive business models.  With less stringent listing conditions overseas and access to capital, Indian startups increasingly looking for fund-raising opportunities abroad.  Need for a platform to allow “new-age companies” having an innovative business model and belonging to the knowledge-based technology sector to list in the country.  To create a viable alternative to offshore listings of software product companies. 1
  3. 3. Eligible issuers and investors  Eligible issuers: - Companies which are intensive in their use of technology/ IP/ data analytics/ bio-tech/ nano-tech and with at least 25% of the pre-issue capital being held by QIBs; or - Companies in which at least 50% of the pre-issue capital is held by QIBs.  Eligible investors: - Institutional Investors (QIB as defined in SEBI (ICDR) Regulations, 2009 along with family trusts, systematically important NBFCs registered with RBI and the intermediaries registered with SEBI, all with net-worth of more than Rs. 500 crore) - Non-Institutional Investors (NIIs) other than retail individual investors 2
  4. 4. Conditions for listing  Allocation of issue – 75% for institutional investors, 25% for non-institutional investors.  Minimum application size - Rs. 10 lakhs, minimum trading lot - Rs. 10 lakhs.  Minimum number of allottees – 200.  Flexibility on providing basis for issue price - may contain disclosures other than standard valuation parameters (P/E, EPS).  Limited disclosures for objects of the issue. 3
  5. 5. Obligations post-listing  No person to hold more than 25% of post-issued capital.  Uniform lock-in of the entire pre-issue capital - 6 months from the date of allotment.  Issuer company to have the option to migrate to main board after 3 years subject to compliance with eligibility requirements of the stock exchanges. 4
  6. 6. Advantages of the new platform  No requirement of showing mandatory track record of distributed profits.  No requirement of having detailed disclosures in relation to objects of issue, basis of issue price etc.  No cap on amount raised for general corporate purposes.  New platform to provide an exit opportunity to the investors.  Relaxed requirement for lock-in of shares. 5
  7. 7. Thank you for being part of this movement! Put together by:

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