Home / Markets / Ipo /  Price IPOs as you like but disclose fully: Sebi

MUMBAI : The Securities and Exchange Board of India (Sebi) does not have any role in the pricing of initial public offerings (IPOs), said chairperson Madhabi Puri Buch on Tuesday, even as she stressed on the need for a detailed disclosure-based regime for the efficient functioning of the capital markets.

“People are free to do what they want to do but they should make disclosures," Buch said, speaking at a capital markets event organized by the Federation of Indian Chambers of Commerce and Industry (Ficci).

The comments from the Sebi chief come amid a growing debate on the market regulator’s role in the pricing of IPOs. This follows a sharp drop in shares of several new age technology firms since they went public in 2021, causing heavy losses to investors and raising concerns of inflated valuations of such companies ahead of their share sales.

“A lot has been said on the pricing of the IPOs of new age technology companies. Our view is simple at what price you chose to do your IPO is your business; we have no business to suggest otherwise. The days of the CCI (Controller of Capital Issue) are long gone. Parliament has mandated Sebi that we should have no view on the pricing of issues. You are free to price the issue at whatever price you consider appropriate," said Buch. “The specific procedure, however, is directed by Sebi, which includes the way IPO documents are filed or the way that they are given in the public domain," she added.

“If a company is coming to IPO, three-six months ago, and has placed its equity with some party, assuming a private party at 100 but wishes to come to the market at 450...we expect you to disclose to the investor what accounts for the difference between 100 and 450. What has changed ? It may be internal or external metrics . Essentially Sebi expects the disclosures pertaining to these aspects," Buch added.

Sebi is also relying on data and technology for efficient functioning. “Every single policy that comes out today is back-tested by data. There is not now a single piece of paper that moves within Sebi that is not backed by data. We will eschew dogma and we will embrace data," she said.

She also pointed out that since the market dynamics are changing at a fast pace, and that “technology is the ‘magic bullet’ that will help to reduce cost, serve the customer better, have better control and compliances." It will also help Sebi solve financial misdoings such as insider trading, front running, and market manipulation that have become commonplace in the business ecosystem.

Meanwhile, the regulator is evaluating as to what form and manner disclosure should be made to the public on trading in derivatives.

“India is not a nanny state….if somebody wants to trade in the Futures and Options (F&O) segment, we don’t think we should stop them," said Buch when asked whether the regulator was concerned with growing retail participation in the F&O segment. “There is information which Sebi is looking at and evaluating as to what form and manner that (disclosure) needs to be disclosed to the public," she added.

priyanka.gawande@livemint.com

ABOUT THE AUTHOR

Priyanka Gawande

Priyanka Gawande is a senior legal correspondent at Mint. She has worked as legal reporter for four years with both television and digital mediums. Based in Mumbai, she reports on disputes across sectors including banking, corporates and finance. This also includes insolvency and bankruptcy cases and intellectual property rights (IPR) litigation. Her focus also comprises tracking capital markets and disputes relating to securities law. Previously, Priyanka worked with Informist Media for 2.5 years covering major insolvency and bankruptcy cases and corporate developments. She started her career in journalism with Business Television India (BTVi) where she reported on primary markets, banking, finance and insurance companies.
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