Promoter-lead manager nexus faces Sebi probeN Mahalakshmi / Mumbai February 17, 2006The Securities and Exchange Board of India (Sebi) is investigating a possible nexus between some lead managers and promoters of companies raising money through public offers. The regulator feels that certain lead managers strike deals with promoter groups to raise money in excess of what is actually sought by companies with an understanding that additional amounts raised will be diverted to lead managers. This translates into higher public offer prices and affects the integrity of the initial public offer (IPO) process, according to a Sebi official.Promoters usually approach lead managers with their capital raising plans. A merchant banker then determines the best price an issue can fetch considering the market condition. Even as IPO proceeds went to companies, the excess money got routed back to lead managers through various fabricated expenses, the official said. This does not get reflected in merchant bankers
