With reference to the report, "Coffee Day sees tamest debut in three years" (November 3), most of the initial public offerings (IPO) in the last two years have been exorbitantly priced; later, they listed and traded at much discounted prices. It appears the Securities and Exchange Board of India has no mechanism to check the pricing of issues and the promoters exploiting it.
The level of over-subscription of the IndiGo issue is surprising. Like foreign institutional investors in the secondary market, qualified institutional buyers play havoc in the primary market. In fact, the level of participation of retail investors is an indication of the merit of an IPO. Allocation to retail and high-net-worth individuals should be fixed at above 50 per cent. There should be an authority along the lines of the erstwhile Controller of Capital Issues to determine the real price of an IPO or follow-on issue.
N Ramamurthy Chennai
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