Ambi moots prescription to prod primary market into life
Our Market Bureau
Mumbai, Jan 23: The Association of Merchant Bankers in India (Ambi) has made a novel recommendation to help revive the primary market. The association has suggested that any company planning to tap the market should issue convertible debentures instead of equity shares.The convertible debentures should be designed in such a manner that they come up for conversion 18 months after the company commences production. The recommendation has been forwarded to Sebi. The conversion price will be decided as per a pre-determined formula based on the prevailing earnings per share and the price-to-earnings multiple. But market observers say that such a price formulation is not the order of the day. Currently, the pricing of an issue is done more on the basis of the net worth of the company. Some merchant bankers feel that the net worth figure puts forth the intrinsic value of the company.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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