Sebi concerned as Rs 600 bn worth of approved IPOs are yet to hit market

Fund raising via IPOs is less than half of last year amid higher volatility in secondary market; 14 of 24 firms listed this year are trading below issue price, making investors wary of new offerings

Market regulator Securities and Exchange Board of India (Sebi) has expressed concerns over the drop in activity in the primary markets.

“Over Rs 600 billion worth of IPOs are yet to hit the markets despite regulatory approvals. IPOs not clicking is a cause of worry,” said Ajay Tyagi, chariman, Sebi.

Speaking at AIBI Summit 2018, Tyagi cautioned that pricing of IPOs should be done more carefully in volatile times and said the onus is on the bankers to get the pricing right.

AIBI is an industry lobby for investment bankers.

"Investment bankers have a role to see that IPOs are reasonably priced and that they are acceptable to both the issuers and the investors," said the Sebi chief.

Fund raising through IPOs has been less than half of last year amid increase in volatility in the secondary market.

Moreover, 14 of the 24 companies that have got listed this year, are trading below their issue prices, making investors wary of new offerings.

Tyagi said direct overseas listing for Indian companies is a concept that is “worth trying”.  A Sebi expert group recently proposed direct overseas listings to help new-age domestic companies easily tap foreign capital. 

Sebi also announced major tweaks to the startup listing framework as the earlier rules failed to attract any companies to list.

Tyagi said an expert group is looking at allowing differential voting rights in such companies.

He said the 30 public sector undertakings (PSUs) are yet to meet the mandatory 25 per cent public shareholding norm and once they hit the market, there will be more quality scrips for investors.

Tyagi said the insurance regulator has "some issues" with the stewardship code on investment disclosures by financial sector companies floated by Sebi at the Financial Stability and Development Council and added that the pension fund regulator Pfrda is agreeable on the idea.

Tyagi said mule accounts are a question of worry and said the regulator has agreed to implement Vishwanathan committee's recommendations and are further examining the implementation of Prevention of Unfair Trade Practices (PFUTP) and Prohibition of Insider Trading (PIT) norms.

The Sebi chairman said there is a need to do more on the insider trading front as there has not been a conviction till date in any of the probes it initiated.  Further, the regulator is also increasing its technological capabilities to check insider trading, he added.

Tyagi said show-cause notices have been issued to three credit rating agencies who had ratings on IL&FS and also revised the norms and guidelines governing their functioning.