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Get IPO pricing right: Sebi chief to bankers

Sebi was looking to bring down the time between closing of an IPO and listing of the security from six days at present to four days, says Ajay Tyagi

Sebi Chairman Ajay Tyagi. Photo: Kamlesh Pednekar
Sebi Chairman Ajay Tyagi. File Photo: Kamlesh Pednekar

Capital market regulator, the Securities and Exchange Board of India (Sebi), has asked investment bankers to price initial public offerings (IPOs) in a manner that retail participation will not be compromised.
 
Speaking at the Association of Investment Bankers (AIBI) summit, Sebi Chairman Ajay Tyagi said, “We want retail participation to grow. Investment banks have to ensure that IPOs are priced rightly.”
 
Tyagi said 2017 has been “very satisfying” for IPOs, with the amount mobilised through new offerings being higher than the previous six years combined. He said transparency and regulatory framework were providing comfort to investors.
 
He cited examples of large insurance IPOs doing badly after listing. “These were large issues, and two of them were from public sector undertakings (PSUs). We want bankers with PSU mandates to inform the government on right pricing.” 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 was looking to bring down the time between closing of an IPO and listing of the security from six days at present to four days.
 
On the recent discussion papers on corporate governance and the derivatives market, he said Sebi was analysing feedback given by the market. “We will take a final view on the derivatives paper by the end of the financial year. The Uday Kotak report on corporate governance will not be taken up at the next board meeting,” he said, adding that over 1,000 entities had given feedback.
 
Tyagi said Sebi had been advising the government to work towards achieving 25 per cent minimum public shareholding. There are 27 PSUs where the government shareholding is currently more than 75 per cent. The deadline to bring it down to below 75 per cent has been extended by a year to August 2018.
 
Tyagi said growth in the mutual funds (MF) industry was a “good story and we want it to sustain”. He said Sebi had set up a separate division only to look at MFs, and that MF assets were helping provide a good counterbalance to overseas investors.
 
Tyagi also said Sebi was “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.”

Sebi asks MFs to stay disciplined 

The Securities and Exchange Board of India (Sebi) has urged the Rs 23-lakh crore mutual funds (MF) industry to stay disciplined and focus on good principles amid gush of inflows from domestic investors. The caution comes at a time when the industry is seeing a dream run with inflows, assets under management, and folio counts touching new record highs. “Huge amount of gushing liquidity is keeping us afloat. Once this liquidity is withdrawn, how does the industry look? How is the industry perceived? This will be very important for all of us to see,” said G Mahalingam, whole-time member, Sebi. He said Sebi would soon issue a discussion paper on total expense ratio in the mutual fund industry. The move is to further bring down cost of investing in mutual funds.

BS Reporter