With Rs 300-bn IPOs yet to take off, Sebi pitches for correct pricing

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Mumbai, Dec 18: The capital markets regulator Sebi on Tuesday voiced concern over the slow pace of primary issues, despite a good market condition, and asked investment bankers to do more “diligence” on the pricing front to get investors in.
Chairman Ajay Tyagi said Sebi has given go-ahead to initial public offers (IPOs) worth over Rs 600 billion in 2018, but many of them are yet to hit the street. Till end October, 24 companies raised Rs 309.59 billion through IPOs but most this been in the March quarter.
Last year was the best in terms of IPO fundraising, as the IPO market jumped to an all-time record of Rs 671.4740 billion in fresh fundraising by over 120 companies, according to data from Prime Database.
According to the same agency, over 40 companies have IPO approvals totalling over Rs 600 billion, but most are not in a hurry as secondary market is roiled. That apart some 30 more companies have filed the draft IPO papers with Sebi.
As of end October, 24 companies raised Rs 309.5907 billion through IPOs but the bulk of the activity was in the March quarter, wherein 14 firms raised Rs 185.917 billion.
“The IPOs are not taking place is something that’s a cause of worry,” he said speaking at an investment bankers’ event, adding companies have found alternatives like preferential issues to raise money. When asked if the issue is pricing, he asked i-bankers to do more “diligence” while setting a price that will be acceptable to both the issuers as well as investors.
“Merchant bankers have a role to see that an issue is reasonably priced and which is acceptable to both issuers and investors,” Tyagi said.
The Sebi chief seemed to suggest that domestic market conditions are better as compared to global peers, with firm macroeconomic fundamentals and said the rupee fall has also been arrested.