At a time when the primary market is going through a lull with companies sceptical of launching an initial public offer (IPO), the capital market regulator has decided to skip intermediaries and directly speak to the issuers to gauge their concerns.
Sources said that Sebi is concerned with the fall in the quantum of fund raising from the capital market and also the fact that most IPOs are trading below the issue price. Incidentally, the debate on IPO pricing has been going on for long between various market players.
?We have been meeting bankers on an ongoing basis. Now, we are going one step further by talking directly to the companies,? said a senior Sebi official. ?We need to know from the issuers the concerns related to the IPO process,? he said.
While Sebi has clarified on various occasions that it is not trying to interfere with the pricing of an IPO, sources said the regulator would at least discuss the matter with the issuers to address concerns related to ?aggressive pricing?. Statistics show that most IPOs that were launched in the last few years are trading below their issue prices.
At a recent conference organised by the Association of Investment Bankers of India (AIBI), Sebi chief general manager VS Sundaresan said bankers need to be more careful while managing IPOs.
?You think the market is over-regulated but I think it is the other way around. People take advantage of this freedom. Our approach is that first we give freedom and if the freedom is misused or abused instead of being properly used then we step in. I do not think we are over-regulated,? he said during a panel discussion. Experts tracking the primary market said Sebi ideally should focus only on the procedural and disclosure-related issues while staying away from the sensitive subject of pricing.
?Sebi seems to be trying to understand the concerns of the issuers,? said Prithvi Haldea, CMD, PRIME, which tracks primary market.
?The regulator would want to know if it is to do with disclosures, policy or some other factors. These things would come out clearly if direct discussions are held with the potential issuers,? he explained.