InvestorQ : Why does the SEBI chairperson not want the regulator to get into IPO pricing?
Arti Chavan made post

Why does the SEBI chairperson not want the regulator to get into IPO pricing?

Rutuja Nigam answered.
3 weeks ago

During a recent speech delivered while addressing the Capital Market Summit organized by FICCI, Madhabi Puri Buch, SEBI chairperson, had a lot of answering to do on the pathetic performance of many digital IPOs in the last few months. However, the SEBI chairperson has clearly underlined that SEBI did not intend to and would not get into the nuances of IPO pricing. The message at the summit was that SEBI as a regulator would create the right ecosystem to protect the interests of investors but not go beyond that.

That brings us to the million dollar question; how will SEBI strike that delicate balance when it comes to investor interests. On the subject of pricing of new age IPOs, Madhabi was quite emphatic that the regulator had no business to get into the pricing aspects of an IPO. That was the prerogative of the issuer in consultation with the investment banker. While SEBI would try to create a foolproof ecosystem to protect the investors, it would not want to be a party to the pricing of digital new age IPOs, either directly or indirectly too.

Madhabi underlined that IPO pricing and performance was something for the investment bankers and the issuers to really worry about, since it had reputational implications. She suggested posing queries on post listing performance of new age IPOs to the investment bankers rather than to the regulator. She did not want to impede on the authority of the investment banker to decide on the IPO price. SEBI would insist on compliances being met. She also suggested that investors should take a measured and long term view in IPOs.