The Securities and Exchange Board of India (Sebi) is working on reducing the time taken to clear offer documents for initial public offerings (IPOs).
Addressing a closed-door meeting of investment bankers on Friday, Sebi chairperson Madhabi Puri Buch said the regulator was keen on cutting the red tape involved in the filing of offer documents and is working on streamlining the process for regulatory clearance.
The average time lag between filing an offer document with Sebi and receiving approval in 2022 has surged to 115 days, the highest in eight years, as per reports.
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Buch said most delays while clearing an offer document happened at the investment bankers’ end and that it was their responsibility to provide adequate information pertaining to the offerings.
It is not unusual for Sebi to reach out to bankers three or four times before giving its final observations, said industry players.
It is this back and forth that causes delays.
The regulator may set a timeline for the bankers to furnish a reply to Sebi’s queries, failing which the offer document may be returned to the banker for refiling.
Experts said clearing a document is time consuming and could take at least a month, even if the regulator introduces new norms to streamline the process.
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On Friday, Buch said the bankers ought to exercise their own professional judgment while arriving at valuations for a company rather than succumb to pressure from promoters.
The regulator has been pushing for greater transparency on the pricing of IPOs. In the last board meeting, it said issuers coming out with IPOs will have to make disclosure of key performance indicators and price per share of issuer based on past transactions and past fund raising done by the issuers from investors.
Issuer shall disclose details of pricing of shares based on past transactions and past fund raising from investors based on secondary sale or acquisition of shares, during the 18-month period prior to an IPO. In case there are no such transactions, information shall be disclosed for price per share of issuer company based on last five primary or secondary transactions, not older than three years prior to IPO.
The pricing of IPOs came to the fore after the shares of a number of new-age companies tanked after listing.