The Securities and Exchange Board of India (Sebi) is working to reduce the time it takes to approve initial public offering (IPO) offering documents.
Madhabi Puri Buch, chairman of Sebi, said Friday before a closed meeting of investment bankers that the regulator is keen to cut the red tape involved in submitting bid documents and is working to streamline the regulatory approval process.
The average time between submitting an offer document to Sebi and receiving approval in 2022 has reportedly increased to 115 days, the highest in eight years.
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Buch said that most of the delays in releasing an offering document occurred on the investment bankers’ side and that it was their responsibility to provide adequate information about the offerings.
It’s not uncommon for Sebi to reach out to bankers three or four times before making his final observations, industry stakeholders said.
This back and forth causes delays.
The regulator may set a deadline for bankers to provide a response to Sebi’s requests, otherwise the offering document may be returned to the banker for resubmission.
Experts say releasing a document is time-consuming and can take at least a month, even as the regulator introduces new standards to streamline the process.
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Buch said on Friday bankers should exercise their own professional judgment when coming up with valuations for a company, rather than give in to pressure from promoters.
The regulator has been pushing for more transparency in the pricing of IPOs. The last board meeting stated that issuers coming up with IPOs must disclose the issuer’s key performance indicators and price per share based on previous transactions and previous fundraising by the issuers to investors.
The Issuer will disclose details of the pricing of Shares based on past transactions and previous fundraising by investors based on second sales or purchases of Shares during the 18 month period prior to an initial public offering. If there are no such transactions, information on the issuer company’s price per share is disclosed based on the last five primary or secondary transactions not older than three years prior to the IPO.
IPO pricing came to the fore after a number of New Age companies’ shares plummeted post-listing.
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