Sebi has proposed tighter rules around the use of IPO proceeds. And, Fitch Ratings has retained India's ratings at the lowest investment grade. How will these impact the primary market? Let's find out
In a bid to safeguard investors’ interest, market regulator Sebi has proposed to tweak rules governing IPOs to bring in more transparency and accountability.
The regulator recently issued a consultation paper in this regard and has sought feedback before the end of this month.
The notable changes include a cap on the amount companies, mainly start-ups, can raise for inorganic growth initiatives and also on the quantum existing shareholders can offload in the IPO.
Further, Sebi has proposed to increase the lock-in period for anchor investors from 30 days to 90 days. It has also called for the monitoring of IPO proceeds.
The proposed tightening of IPO funding comes amidst a galore of public offers which is likely to see a record mop-up of Rs 1 trillion this year.
Besides, a bulk of this money was raised by new-age and loss-making tech-based start-ups including Paytm, Policybazaar, and Zomato.
While the proposals are yet to be adopted, industry players feel changes around anchor investors and cap on OFS quantum could come across as extremely unpalatable and may have a cascading effect on the Indian capital markets going forward.
Given this, it remains to be seen what the market watchdog will decide after receiving stakeholders’ feedback.
No comments:
Post a Comment