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Unlisted Indian firms can list via debt IPOs: Sebi

Unlisted Indian companies will be allowed to list on the country's bourses through initial public offerings of debt instruments, a top official of the country's capital market regulator said on Wednesday.

But the debt issue should have an investment-grade rating and should be rated by two agencies if its size is more than Rs 1 billion, the Securities and Exchange Board of India said in a circular to stock exchanges.

"The board has decided to permit unlisted companies to list on stock exchanges by issuing either convertible or nonconvertible debt securities," D R Mehta, SEBI's chairman, told Reuters.

The SEBI board had taken this decision in late December and issued a circular to this effect on Tuesday, he said.

Before this, companies could list only through initial public offerings of equity. They can now list by making an IPO of debt instruments.

The move is likely to benefit companies that have long-gestation projects, like in the infrastructure and refinery sectors, analysts said.

Companies take years to break even with such projects, and are often unable to pay dividend until then.

Loss-making companies cannot pay dividend according to Indian corporate law.

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