'IPOs not clicking is cause for worry,' says Sebi chairman.
Sundar Sethuraman reports.
Illustration: Dominic Xavier/Rediff.com
The Securities and Exchange Board of India has expressed concern 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 cause for worry,' said Sebi Chairman Ajay Tyagi.
Speaking at the AIBI (Association of Investment Bankers of India) Summit 2018, Tyagi cautioned the pricing of IPOs should be done more carefully in volatile times and said the onus was on bankers to get the pricing right.
"Investment bankers have a role to see that IPOs are reasonably priced and that they are acceptable to both the issuers and the investors," Tyagi said.
Fund raising through IPOs has been less than half of 2017 amid increase in volatility in the secondary markets.
Moreover, 14 of the 24 companies that got listed in 2018 are trading below their issue prices, making investors wary of new offers.
Direct overseas listing for Indian companies was a concept 'worth trying', Tyagi said.
A Sebi expert group recently proposed direct overseas listings to help new-age domestic companies tap foreign capital more easily.
Sebi announced major tweaks to the startup listing framework because the earlier rules failed to attract any companies to list.
Tyagi said an expert group was looking at allowing differential voting rights in such companies.
30 public sector undertakings were yet to meet the mandatory 25% public shareholding norm and once they hit the market, Tyagi felt there will be more quality scrips for investors.
The insurance regulator, Tyagi said, had '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 was agreeable to the idea.
Mule accounts, Tyagi disclosed, were a matter of worry, and said the regulator had agreed to implement the Vishwanathan committee's recommendations and was examining the implementation of the Prevention of Unfair Trade Practices and Prohibition of Insider Trading norms.
The Sebi chairman said there was a need to do more on insider trading because there had not been a conviction to date in any of the probes it initiated.
Further, the regulator is increasing its technological capabilities to check insider trading, he added.
Showcause notices, Tyagi revealed, had been issued to three credit rating agencies who had ratings on IL&FS and also revised the norms and guidelines governing their functioning.