Informist, Monday, Oct 30, 2023

--SEBI Shah: IPO disclosures not backed by documents in some cases

--SEBI Shah: Lead managers must physically visit cos' sites before IPO

MUMBAI – The Securities and Exchange Board of India has noticed while vetting offer documents for initial public offerings filed with it that in some cases disclosures are not backed by documentation, Deep Mani Shah, the market regulator's chief general manager, said at an investment bankers association workshop today.

According to Shah, any fact claimed as such in an offer document must have a supporting document to back up that claim.

The market regulator has also found that in some cases a pre-IPO physical visit verification has yielded negative results and that these are cause for concerns. Shah said that lead managers to IPOs must necessarily do pre-IPO physical site visit of companies whose issue they are managing.

SEBI is keen that investment bankers endeavour to give the most relevant markers on objects of issue and risk factors upfront and not bury it inside the offer document. Shah said that a lay investor must be told exactly, and upfront, what the main risk factors are and what are the objects of the issue.

The offer document forms the basis of investment for the investor, Shah said. Mahavir Lunawat, the founder and managing director of Pantomath Capital said while it may be easy to say the offer documents are faulty, there is a need to standardise SEBI's observations to various lead managers so that the process is made simpler for investment bankers.

However, according to Prithvi Haldea, founder chairman at Prime Database, the offer document, including its abridged shorter version, is of no interest to the man on the Street.

IPOs typically come when liquidity is high in the equity markets and the demand for IPOs is such that nearly all of them are getting listed at a premium, said Haldea. Qualified institutional buyers, that is, institutional investors, take a more intelligent call than the man on the Street in deciding on whether to invest in an IPO or not, he said.  End

Reported by Rajesh Gajra

Edited by Maheswaran Parameswaran

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