IPO, deal valuations: Sebi calls for guardrails

Securities and Exchange Board of India (Sebi) whole-time member, Kamlesh Chandra Varshney, on Friday expressed concern over valuations of initial public offerings (IPOs) and certain corporate arrangements, calling for stronger guardrails to protect minority shareholders.

- KHUSHBOO TIWARI

“There are cases we have seen where corporate arrangements are taking place and promoter-shareholders probably get valuation at an inflated price to get a better swap allocation, which is detrimental to minority shareholders. We are receiving lots of complaints from these minority shareholders that their interests have been compromised,” Varshney said at the Gatekeepers of Governance event organised by Excellence Enablers.

Valuation of such arrangements is an area where the need for specific guidelines could be explored, Varshney said, adding that Sebi might need to work with the Insolvency and Bankruptcy Board of India (IBBI) on this front.

Addressing the issue of IPO pricing, he clarified that Sebi does not interfere in valuations and has long moved away from controlling capital issues, leaving pricing to be determined by investors, a practice he described as appropriate.