Fair Price Of Shares In IPO Necessary: SEBI Chairman

Fair price of shares in IPO necessary, Merchant banker should keep balance in the interests of IPO issuing company and investor: SEBI Chairman.

Capital markets regulator SEBI has given a clear message to the merchant bankers of the upcoming Initial Public Offer (IPO) to keep the share price of the respective companies at an appropriate level.

Securities and Exchange Board of India (SEBI) Chairman Ajay Tyagi said that proper pricing in IPOs is very important, which merchant bankers should pay close attention to.

According to him, the merchant bankers should also follow the relevant rules diligently.

Tyagi also advised the merchant bankers to conduct extensive consultations before bringing the IPO to balance the interests of both the issuing company and the investor.

Their shares opened and closed significantly lower on the day of listing against the price band.

Market analysts, especially regarding Paytm’s IPO, were constantly saying that the price band fixed by the company for its shares is too high for the company’s valuation.

For this reason, the shares of Paytm fell about 33 percent on the day of listing itself.

Tyagi said the capital markets regulator will not hesitate to take action against any party that does not follow the established rules in IPO cases.

Referring to the responsibilities of merchant bankers at the annual function of the Investment Bankers’ Association of India (AIBI).

The SEBI chairman said that fairness should also be taken care of along with the interests of investors.

SEBI will change its rules for new-age technology companies. According to Tyagi, the current financial year has been extremely prosperous in terms of IPOs.

From April to November this year, 76 companies have raised over Rs 90,000 crore through IPOs.

More importantly, due to the rapid increase in the number of retail investors in the market, there has been a lot of rally in the stock markets.

The average number of applications from retail investors reached 15.65 lakh in the current financial year till November.

He said that along with the changing times in the primary market, many new challenges have come.

These include the unconventional business model of the company launching the IPO, disclosure requirements for new-age companies, and company valuation challenges.

One challenge is that many new-age companies are making losses at the time of listing and the regulator is currently allowing it.

But we will take into account the experiences gained from them and the reactions of investors and will modify the rules if necessary.

It is noteworthy that SEBI has issued an advisory in this regard in November.

Based on the feedback received from it, it will soon decide on possible changes in the modalities and rules for IPOs of such companies.

The fair price of shares in IPO necessary: This statement is important.

It has been seen many times in the past that merchant bankers have overvalued the company at the time of IPO, keeping the price band of the shares relatively high and they have not had the same success with the listing.

Recently, with the IPO of Paytm’s operator company One97 Communications, it was seen that its shares fell about 33 percent on the day of listing itself.

Many analysts, before the launch of this IPO, and even after the shares broke down, maintained that the price band of the shares under the IPO was higher than the actual valuation of the company.

Retail investors visible.

The amount invested by retail investors in IPO so far in the current financial year has reached Rs 5.43 lakh crore

The average number of applications from retail investors reached 15.65 lakhs in the current financial year till November.

76 companies have raised over Rs 90,000 crore from IPOs in the current financial year from April to November.