“We have few other proposals in pipeline that are in the early discussion stage – IPO reforms on the book building & fixed price framework and provisions relating to price band and further reforms on preferential issue – being some of them,” Tyagi said.
Tyagi said that the advisory committee is also debating certain concerns regarding SPACs and the safeguards that investors will need if the investment vehicle was allowed in India.
SPACs have returned to prominence over the past year, especially in the US, as a means to raise capital from investors without going through the traditional IPO route. Such instruments are generally like blank cheque companies.
A SPAC acts like a shell company with the only purpose of acquiring another company within a stipulated period of time. Generally institutional investors would raise capital from investors with the aim of acquiring a company within two-three years. In the event of acquisition, holders of the SPAC are offered shares of the new merged entity or an exit.
In case the SPAC fails to acquire the company within the stipulated time, the capital raised is returned to investors along with interest.
While the SPAC phenomenon ran hot in the US in 2020, the turn of the year has not been kind to the market as several SPACs listed on the US market have collapsed losing billions of dollars in notional value.
