Soon IPO investors will get to see the track record of the investment banks managing the share sale. The board of Association of Merchant Bankers of India (Ambi), an industry body for investment banks, will meet during the second week of May to mull the disclosure of track record of merchant bankers.
According to a person familiar with the development, Ambi is likely to discuss the proposal of having an upfront section on the investment bank?s website showcasing its past performance. Market regulator Sebi has asked Ambi to discuss the proposal and give suitable suggestions for implementation of the disclosure of track record, the person said.
The track record of investment banks will be gauged on the basis of post-listing performance of share sales handled by them. The section will compare issue price and current market price of all companies.
The Ambi meeting will also discuss other proposals on disclosing the track record. These include incorporating the past performance of the merchant bankers in the offer document of the company floating the IPO. Disclosure of merchant banks?track record is part of a series of measures proposed by Sebi to enhance the level of compliance among the market intermediaries and protect the interests of investors.
During last year?s Ambi annual meet, the regulator had pulled up merchant bankers for negative returns given by IPOs in recent years.
Sebi executive director Usha Narayanan at that meet had suggested that merchant bankers measure their own performance on the basis of returns given by the issues handled. She had also urged the merchant bankers to price the issues appropriately by leaving gains on the table for investors.
Sebi?s concern stems from the fact that over two-third of companies listed in the last financial year are trading below their issue price.