What did Sebi chairman Tuhin Kanta Pandey say about IPO disclosures?

Pandey called for more rigorous disclosures in IPO offer documents, particularly concerning risk factors, valuation rationale, and fund utilization.

Why are improved disclosures important for IPOs?

Better disclosures help investors understand the offering, reduce regulatory queries, and streamline the fundraising process.

What is Sebi's concern regarding IPO valuations?

Sebi noted a mismatch between valuations in the unlisted market and prices discovered during IPO book-building.

Home / Business and Economy / Sebi Chief Demands IPO Disclosure Overhaul

Sebi Chief Demands IPO Disclosure Overhaul

15 Jan

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Summary

Sebi chairman Tuhin Kanta Pandey urged for more rigorous IPO disclosures.
Companies must clearly explain past capital raisings and control changes.
Valuation mismatches between unlisted and listed markets flagged.

Sebi Chief Demands IPO Disclosure Overhaul

Securities and Exchange Board of India (Sebi) chairman Tuhin Kanta Pandey has mandated more rigorous disclosures in IPO offer documents. He stressed the importance of detailed explanations regarding risk factors, valuation rationale, and how funds raised will be utilized. Pandey noted that gaps in information not only confuse investors but also extend fundraising processes due to regulatory reviews.

Pandey further stated that disclosures concerning capital structure must explicitly detail past capital raises, preferential allotments, and any changes in control, particularly those occurring close to the IPO. He also called for enhanced transparency in explaining business models, revenue, and cost drivers, emphasizing that Management Discussion and Analysis sections should go beyond mere descriptions to critically analyze performance drivers.

The Sebi chairman also drew attention to discrepancies between valuations in the unlisted market and discovered prices during IPO book-building. He indicated that Sebi is exploring ways to address the surge in unlisted market activity, in consultation with the Ministry of Corporate Affairs. These remarks come as India leads the global IPO market in terms of issue numbers.