The Securities and Exchange Board of India has no business in suggesting pricing of startup IPOs, Chairperson Madhabi Puri Buch said but sought more disclosures on how valuations are arrived at.
"A lot has been said about the pricing of IPOs of tech companies…at what price you choose to do the IPO is your business, we have no business to suggest otherwise," Buch said at FICCI's annual Capital Markets summit in Mumbai on Tuesday. A company is free to ask for a higher price, she said, but needs to disclose how IPO valuations are arrived at. A company cannot sell shares to investors at Rs 100 and then seek Rs 450/share in an IPO a few months down the line.
Buch's comment comes amid concerns of unsuspecting retail investors being taken for a ride due to high valuations sought by new-age tech firms. For example, Paytm's share price collapsed to a third of the issue price within a few weeks of listing.
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When asked about some recent incidents and what can be done to avoid such experiences, Buch parried the question saying investment bankers ought to answer that. Still, SEBI is analysing data and information on retail participation in the futures and options segment, which may lead to more disclosures to be made available to them, she said.
"SEBI will continue to be consultative and democratic in its approach while making regulations and be driven only by data," Buch said.
As part of a reorganisation exercise, SEBI has appointed officials in every department whose key resource area is to come out with ideas on regulation which will make the industry "celebrate", she said.
The regulator has also sought changes in the SEBI Act which will help it test potential ideas in a regulatory sandbox, she said.
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