Market watchdog SEBI is mulling over ways to rein in erring merchant bankers regarding overpricing of IPOs and hyping public issues through misleading advertisements and media reports outside the regulatory ambit.
Sources close to the development said that the regulator is actively considering bringing out soon a discussion paper on the matter, wherein it would seek public comments on draft regulations to curb the menace of overpricing and hyping public offers.
Sources said that the issue is likely to be discussed in the SEBI board meeting scheduled for tomorrow and thereafter the regulator might soon issue the draft guidelines for public comments.
Sources said that the SEBI could propose stringent actions against the erring bankers with regard to overpricing, unnecessary hype and violations of a standard code of conduct and business ethics, which would be detailed out in the discussion paper.
The matter holds significance in the backdrop of SEBI warning the merchant bankers against creating a big hype in the case of the recently concluded mega IPO of Coal India, which is looking to raise an estimated over INR 15,000 crore through the country's biggest ever IPO that was heavily oversubscribed.
Although, the Coal India IPO was widely considered as a well-priced public offer, a number of recent IPOs especially by private companies, have been criticized severely for being over priced.
Mr CB Bhave chairman of SEBI even the at an annual merchant banking summit organized by the Association of Merchant Bankers in India last month, rued the trend of IPOs being over priced. He urged the bankers to price the offers reasonably and said that high pricing is keeping retail investors away from the offers.
He said that the issuers were not willing to leave enough on the table for retail investors. Mr Bhave had said that "In a bid to maximise returns for the promoters, merchant bankers are not looking at the interest of retail investors.”
Sources said that besides pricing of the offers, SEBI could also propose ways to discourage bankers from quoting near-zero fees to get the mandate for managing the public offers.
(Sourced from PTI)
