Buch says SEBI has no role in IPO pricing of new-age tech firms
The Hindu
‘It is for the i-bankers to reply on such concerns’
Sebi has "no business" suggesting IPO pricing for new-age tech companies, and it is the investment bankers who should allay any concerns around the issue, chairperson Madhabi Puri Buch said on Tuesday.
Ms. Buch, an investment banker-turned-regulator, said that companies need to be more forthcoming on disclosures on how valuations have changed between a pre-initial public offering (IPO) placement of shares and the price which is being asked for in the issue.
"A lot has been said about the pricing of IPOs of the new tech companies. Our view is simple. At what price you choose to do your IPO is your business. We have no business to suggest the price... You are free to price the issue at whatever price you consider appropriate," Ms. Buch said at an event organised by industry lobby FICCI here.
It can be noted that there have been concerns about investors, especially the unsuspecting retail ones, being taken for a ride due to high valuations sought by new-age tech companies. The share price of payment platform Paytm collapsed to a third of the IPO issue price within a few weeks of listing, and a few other companies also faced similar outcomes.
Amid the speculation over SEBI's response on such issuances, a member of the audience asked Ms. Buch about remedial measures which can be adopted to protect investor interest. M. Buch parried the question saying there are many i-bankers who sell such issues in the audience and also the stage from which she was speaking, and it is for the i-bankers to reply on such concerns.
Seeking to drive the point about disclosures, the first woman chief of SEBI explained through an example of a company selling shares to investors at ₹100 and then asking for ₹450 in an IPO within a few months.
She said a company is free to ask for a higher price, but needs to disclose what happened in the intervening period which justifies the massive change in the valuation.
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