Capital markets regulator Sebi is investigating three initial public offerings (IPOs) for allegedly inflating the number of subscriptions received, reported the news agency Reuters citing Sebi chairperson Madhabi Puri Buch. However, the agency or Buch did not disclose the names of the companies.
At an event on Friday, Madhabi Puri Buch said that the capital market watchdog is working on measures to curtail such malpractices. The comments from Buch come in the backdrop of rising demand for IPOs in the last few months.
In the year 2023, about 175 small and medium-sized enterprises (SMEs) and more than 55 mainboard companies made their debut at Dalal Street, with some companies receiving outstanding subscriptions and historic debuts. The BSE IPO index surged about 35 per cent in the previous calendar.
According to sources, who prefered to remain anonymous, the companies are most likely to belong to the SME segment, wherein the frenzy and euphoria has been enormous lately. The SME fund raising has been close to Rs 5,000 crore in the previous calendar, where more than two dozen companies doubled investor's wealth on debut.
The most visible aspect of SME IPOs was the subscription rates, reported Economic Times citing the trading platform FYERS. Fifty-one companies reported a subscription rate of over 100 times while 12 witnessed subscription rates more than 300 times. "Retail interest in SME IPOs were at record levels," it added.
However, fundraising by mainboard players through IPOs dropped 17 per cent to Rs 49,434 crore by 57 companies in 2023 compared with Rs 59,303 crore raised by 40 IPOs in 2022, suggested the data from Prime Database. However, 2022 included the behemoth issue of LIC, wherein the government raised about Rs 21,000 from the biggest issue of Indian markets.
Amid the flurry of IPOs, Buch has been flagging concerns over high valuations of some issues and certain malpractices being adopted in the primary market activities, particularly in the SME space. She has been addressing the issue now and then at multiple platforms and events to safeguard the interest of retail investors.
Madhabi Puri Buch has completed a little over two years at the capital markets regulator. Buch is the second non-bureaucrat in about two decades to head Sebi.
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