Sebi IPO Pricing: Sebi cannot control IPO pricing, but full disclosure mandatory: Madhabi Puri Buch

Speaking at a Federation of Indian Chambers of Commerce and Industry (FICCI) event, she said that transparency is the leading foundation to ensure trust among the investors to ensure growth and development of a business.

Buch said that the regulator will increase its pace over formation of new policies and regulation as the corporate worlds, business and markets are growing rapidly and the regulator can not be left behind.

She added that Sebi has no say in the business or operation of a company, but it has a little stake in how the company does it. She, however, reiterated that listed entities would need to disclose everything about the business to ensure trust and transparency.

Commenting on the initial public offering (IPOs) of new-age companies, Buch said that pricing and valuations are the company’s business and Sebi cannot interfere in it.

“Sebi cannot have a view on pricing, and companies are free to price their issue, which they feel is appropriate for them,” she said.

Sebi was criticised by many for allowing loss-making new-age internet companies to float their initial stake sales at ultra-rich valuations and are now trading at up to 50 per cent below their issue prices.

She, however, said if a company is issuing its shares in pre-IPO placement or even earlier at a certain price, which is less than the proposed price of the IPO, the company must disclose the reason for the price variation.

Buch added that even if nothing had changed in the metrics of the company, which led to price variation in IPO and pre-IPO offering, the company should disclose the same for the investors to build trust.

She also said the companies must inform them of the litigation about the key managerial personnels in the documentation, if any.

Buch said that Sebi’s regulations were not only for protection of investors, but also ensure protection of fundraising entities.

Speaking at a Federation of Indian Chambers of Commerce and Industry (FICCI) event, she said that transparency is the leading foundation to ensure trust among the investors to ensure growth and development of a business.

Buch said that the regulator will increase its pace over formation of new policies and regulation as the corporate worlds, business and markets are growing rapidly and the regulator can not be left behind.

She added that Sebi has no say in the business or operation of a company, but it has a little stake in how the company does it. She, however, reiterated that listed entities would need to disclose everything about the business to ensure trust and transparency.

Commenting on the initial public offering (IPOs) of new-age companies, Buch said that pricing and valuations are the company’s business and Sebi cannot interfere in it.

“Sebi cannot have a view on pricing, and companies are free to price their issue, which they feel is appropriate for them,” she said.

Sebi was criticised by many for allowing loss-making new-age internet companies to float their initial stake sales at ultra-rich valuations and are now trading at up to 50 per cent below their issue prices.

She, however, said if a company is issuing its shares in pre-IPO placement or even earlier at a certain price, which is less than the proposed price of the IPO, the company must disclose the reason for the price variation.

Buch added that even if nothing had changed in the metrics of the company, which led to price variation in IPO and pre-IPO offering, the company should disclose the same for the investors to build trust.

She also said the companies must inform them of the litigation about the key managerial personnels in the documentation, if any.

Buch said that Sebi’s regulations were not only for protection of investors, but also ensure protection of fundraising entities.