Sebi chief hits out at merchant bankers
A Sebi analysis shows that of 117 issuances between 2008-09 and 2011-12, 72 were trading not just below the issue price but also underperforming the benchmarks. In other words, two-thirds of issuances had underperformed the indices. Comparing the investment banking business with matchmaking, Sinha said it seemed bankers highlighted only the good qualities of a company while choosing to ignore the risk factors.
Interestingly, Sebi has taken a stern stance against investment bankers tightening regulations related to the due diligence of an company going in for an initial public offering (IPO). Sebi has made it mandatory for bankers to disclose their track record in the draft document of IPOs. “What does the Indian matchmaker do? He goes out and tries to sell all the good qualities of the bridegroom. Are we doing the same with companies that are not ready (for an IPO)?” he asked.
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