MUMBAI: Emphasizing the need for a fully disclosure-based mechanism for better functioning of capital markets, Securities and Exchange Board of India (SEBI) chairperson Madhabi Puri Buch said on Tuesday that the pricing of initial public offerings or IPOs will be The regulator has no role. ,
Addressing FICCI’s capital markets event, Butch said, “people are free to do what they want but they must disclose”, she said.
In 2021, several new age technology companies came out with their initial public offering. However, despite having higher valuations, most of the companies are trading at lower prices. This led to massive destruction of investors’ assets and also gave rise to a whole lot of debate on the pricing of the issues and the role of SEBI in this.
Butch said, “A lot has been said on the pricing of new-age technology companies’ IPOs. Our view is simple that at what price you chose your IPO, it’s your business, we have no business to suggest otherwise.” The days of CCI (Capital Issue Controller) are long gone. Parliament has ordered SEBI that we should not have any opinion on pricing of issues. You are free to price the issue at any cost you wish. You deem appropriate.However, the specific procedure is to be guided by SEBI including the manner of filing IPO documents or the manner of placing them in the public domain.
“If a company is coming into an IPO three-six months back and has placed its equity with a party that believes to be a private party 100 but wants to come to the market 450…we expect you to tell the investor what accounts for the difference 100 more 450. What has changed? This can be internal or external metrics. Essentially, SEBI expects disclosures on these aspects.”
SEBI has been relying on data and technology which has proved to be very helpful to the regulator in many aspects. “In today’s context, some rules may be completely inappropriate. Going forward, what’s important to us is principle first and data. We invite data. Every single policy that comes out today is backed up by data- Test is done. There is no longer a single piece of paper within SEBI that is not backed by data. We will avoid dogma and we will embrace data,” Butch said.
She also pointed out that since market dynamics are changing at an ever-increasing pace, technology is the ‘magic bullet’ which will help the regulator to solve many financial wrongdoings like insider trading, front running, market manipulation etc which are common. Huh. in the business ecosystem.
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