As IPOs dry up, Sebi chief asks i-bankers to get pricing right – All you need to know

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Published: December 19, 2018 12:09:49 AM

The chief of markets regulator Sebi on Tuesday expressed concerns about the slow pace of initial public offerings (IPOs) hitting the market this year and asked investment bankers to play a key role on pricing to draw investors.

Sebi chairman Ajay Tyagi in Mumbai on Tuesday (Express Photo: Pradip Das)

The chief of markets regulator Sebi on Tuesday expressed concerns about the slow pace of initial public offerings (IPOs) hitting the market this year and asked investment bankers to play a key role on pricing to draw investors.

So far this calendar year, the regulator has given its go-ahead to about 70 companies to raise over Rs 60,000 crore, but many of them are yet to enter the primary market, Securities and Exchange Board of India (Sebi) chairman Ajay Tyagi said at an event organised by the Association of Investment Bankers of India (AIBI). However, till the end of September, 25 companies have raised Rs 30,959 crore through IPOs.

Since September 2018, no company has been listed in the mainboard IPO, which requires a minimum post paid up capital of `10 crore.

In the previous calendar year, the IPO market had recorded an all-time high fresh fund-raising of `67,147.4 crore by over 120 companies, according to data from Prime Database.

The minimum post paid up capital to get listed in a main board IPO is `10 crore, while for NSE Emerge, it is `25 crore.

When asked if the recent halt in the main board IPO is because of pricing, Tyagi said, “The merchant bankers have a role to see that IPO issuance is reasonably priced and is acceptable to both issuers and investors.” Primary market participation of foreign investors had hit a record high last year, FE had reported earlier.

Tyagi added that companies are waiting for the markets to get better. “Globally also if you see October month has been worse, in fact for developed markets like US, it was the worst market scenario in the last two-four years. It is now for the issuers and investors to take a call whether it is the right time to raise money,” he added.

Prithvi Haldea, founder chairman of Prime Database and an advisor to Association of Investment Bankers of India (AIBI), said the pricing expectations of the issuers are still high than what domestic institutional investors are prepared to invest. In contrast to mainboard IPOs, the SME (small and medium enterprises) segment has performed better as the amount of money raised has almost doubled this year compared to the previous year. Tyagi added the SME IPO platform has taken off, saying this fiscal has already seen `1,500 crore being raised as against `800 crore in the previous year.

He attributed reasons such as inclusion of family trusts and credit investors. However, alternate investment funds (AIFs), private equity (PE) has been quite good when compared with the IPOs. FE earlier reported that alternate investment funds (AIFs) flows are set to hit a record high this year with commitments worth over `2 lakh crore and corporate funds worth `1 lakh crore already raised.

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