INSUBCONTINENT EXCLUSIVE:
NEW DELHI: Markets regulator Sebi last week brought in certain changes in the primary market, recasting capital raising norms for
companies and easing disclosure requirements.
Among the key changes were easing of financial disclosure requirement for an IPO to three
years from five years earlier, a reduction in timeline for announcing IPO price band to two working days before opening of the issue from
five earlier, and inclusion of insurers and foreign portfolio investors in the anchor investor category.
Will it reduce grey market activity
Will it increase IPO issuances in the market Will it make things friendlier for investors
Market watchers say while some of the moves are in
decisions may have no impact on grey market.
In times of fast moving internet, where banking transactions are being conducted online and
messages become viral within seconds, the grey market will still exert influence irrespective of the curtailment of IPO pricing timeline to
two days from five, he said
They will help more and more companies raise funds from the capital market with lesser risks
For example, the cut in time for price band announcement to two days will reduce market-related uncertainty for the issue, if the broader
But have the changed the game for IPO investors.
Abhimanyu Sofat, Head of Research, IIFL Securities, said that higher number of days (five)
for the IPO price band used to help investors plan and arrange funds
The cut in timeline will surely have an impact.
He said the addition of more institutional investors may impact listing gains, as some
investors who would have otherwise brought shares on the listing day will now bid as anchor investors.
"Wider participation of institutional
players is better for all
Earlier only few players were getting allotments in this category and making a killing
Some participants had taken funds specifically to invest in pre-IPO placements
Now such routes will be closed
Widening of the definition of anchor investors will normalise earnings for all participants," said Modi.
While a cut in the timeline for
financial disclosures to three years from five is expected to bring in more listings, that move is not seen as a big positive for
background.
After all, numbers speak loud and clear, he said
Both Sofat and Modi believe reduction of the minimum anchor investor size to Rs 2 crore from the existing Rs 10 crore in the case of SME
IPOs will lead to more participants in pre-IPO placements.
Generally, sizes of these IPOs are small, in the range of Rs 20 crore to 40 crore
The Sebi move was the most logical option to democratise the process and broadbase it, Modi said
Market watchers also welcomed the Sebi move to include immediate relatives within the ambit of the definition of promoters.
