Click to play videoMumbai: Everyone is doing it bit to improve infrastructure, even stock market regulator SEBI.
India's infrastructure need over the next few years comes to a staggering $500 billion and the need has become urgent enough for regulators like SEBI to take serious steps to facilitate capital raising for large infrastructure projects.
Sources say the regulator is even mulling relaxing some guidelines to put these projects in top gear.
To begin with, SEBI is planning on making changes in the Disclosure and Investor Protection guidelines – which, amongst other things, require such projects to have 'assured means of financing'.
This is a guideline that many large infrastructure projects wanting to raise capital cannot meet because they have very few assets on their books.
In addition, lenders do not guarantee complete funding since the gestation periods for such projects are long.
Experts say many infrastructure projects generally do not have all their debt financing in place in the early stage, and so they cannot raise equity. This is something the SEBI is proposing to change.
Sources say SEBI is considering permitting projects that have a part of their debt financing in place – to raise money via the capital market.
But this relaxation may come with additional disclosures that the company may have to make in the risk factors associated with their public issues.
Although SEBI has commented on the issue, but sources say the SEBI board is likely to take it up in its next meet, towards the end of January.
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