Sebi chief Ajay Tyagi asks investment bankers to get IPO pricing right

Sebi is looking to bring down time between closing of IPO and listing of security from 6 days to 4 days

ajay tyagi, Sebi
Sebi Chairman Ajay Tyagi. Photo: Kamlesh Pednekar

Capital market regulator Securities and Exchange Board of India (Sebi) has asked investment bankers to price initial public offerings (IPOs) in a manner that retail participation is not be compromised.

At the Association of Investment Bankers (AIBI) summit, Sebi Chairman Ajay Tyagi said, "We want retail participation to grow but investment banks have to ensure that IPOs are priced rightly."

Tyagi said 2017 has been "very satisfying" for the IPO market as the amount mobilised through new offerings is higher in comparison to previous six years combined. He said transparency and regulatory framework are providing comfort to investors.

The Sebi chief cited examples of large insurance IPOs performing poorly after listing. "These were major issues and two of them were from public sector undertakings (PSUs). We want the bankers with PSU mandates to inform the government on right pricing," he said.

Tyagi said the IPO pipeline for 2018 looks equally encouraging with new paper worth more than Rs 60,000 crore waiting to hit the market.

He said Sebi is looking to bring down the time between closing of an IPO and listing of the security from six days currently to four days.

About discussions held on corporate governance and derivatives market, Tyagi said Sebi is currently analysing the feedback given by the market.

"We will take a final view on the derivatives paper by the end of the current financial year. The Uday Kotak report on corporate governance will not be taken up at the next board meeting," he said, adding that more than 1,000 entities have given feedback on the Kotak committee recommendations.

Tyagi said Sebi has been advising the government to work towards achieving the 25 per cent minimum public shareholding (MPS). There are 27 PSUs where the government shareholding is more than 75 per cent. The deadline to bring it down to below 75 per cent has been extended by one year to August 2018. "We have written to the government to start work (of achieving MPS) from now," he said.

Tyagi said the growth in mutual fund (MF) industry is a "good story and we want it to sustain." He said Sebi has set up a separate division only to look at MFs.

MF assets are helping provide a good counterbalance to overseas investors, he added.

Tyagi also said Sebi is "seriously" looking into the issue of prescient messages on company results circulated on WhatsApp groups.

"These are companies of repute. The messages are quite close to what has come in results, so it's something we cannot really sit quietly on," said Tyagi.