The Telegraph
Thursday , December 13 , 2012
Since 1st March, 1999
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Sebi sniffs IPO foul play

Mumbai, Dec. 12: Market regulator Sebi feels corporate rivalry has now penetrated even the primary market where competitors try to sabotage initial public offerings by filing complaints and thereby delaying the whole process.

“Particularly in the context of IPOs, I find that large number of complaints are filed against a company that is coming out with a flotation. My gut feeling is that the complaints are not necessarily from investors, investor associations or even activists. I feel that a good portion of those complaints are also promoted by competitors,” Securities and Exchange Board of India chairman U.K. Sinha today said while speaking at a CII seminar.

The primary market, which has been sluggish for a large part of this year, has shown some revival recently with quality issues such as CARE Ratings and Bharti Infratel.

According to analysts, a complaint filed against a company or an issue could delay the entire IPO process.

Sinha said close to Rs 60,000 crore worth of issues approved by the capital market regulator since 2009 were allowed to lapse by companies, presumably because of market conditions. This had necessitated Sebi’s intervention and examination of the deeper causes.

He advised firms to realign their expectations from the market and make use of the available infrastructure for reviving it. He also urged companies to focus on compliance and strengthen their internal control systems.

Later, on the sidelines of the conference, Sinha said Sebi had set up a committee under former cabinet secretary K.M. Chandrashekhar to standardise the rules regarding foreign investments in the capital markets.

The committee will simplify and standardise the norms regarding investments in the capital markets by all overseas entities, including foreign institutional investors, foreign venture capital investors, qualified financial institutional investors and NRIs, and also to strengthen surveillance over them.

“Why should we have various routes/rules for foreign investors? Why should we have sub-accounts, ODIs, FIIs, QFIs and NRIs and all that?” Sinha said.