Investor protection India: SEBI whole-time member Kamlesh Varshney on Friday said there is no regulatory lacuna in valuation of initial public offerings (IPOs), but “we have to see how we can put in more safeguards to protect the interests of retail investors.”
He said in the 10th edition of ‘Gatekeepers of Governance’, a summit related to corporate governance, that the market regulator’s move away from the control of capital issue is a right step, but at the same time it has to be ensured that valuation is done appropriately, effectively and efficiently.
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Varshney said, “I am not saying that there is regulatory deficiency in this, but it would be good to consider whether the valuation being done is correct or not. We have seen that a lot of IPOs are coming up, where retail investors are challenging the valuation.” SEBI (Securities and Exchange Board of India) Chairman Tuhin Kant Pandey had made it clear on Thursday that the capital market regulator will not interfere in IPO valuation.
He had said, “We do not decide the evaluation. It depends on the investors.” Recently, concerns were raised about the price of Lenskart’s Rs 7,200 crore IPO. Earlier, many stakeholders had raised valuation concerns on IPOs like Nykaa and Paytm. “We now believe that when big investors are doing valuations, SEBI should keep itself away from it,” Varshney said.
He said there have been cases in valuations during corporate arrangements where promoter shareholders are valued at inflated prices, causing loss to minority shareholders. Varshney said that this is a regulatory shortcoming and perhaps SEBI will have to work on it in future.
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