Valuation of initial public offerings (IPO) is not a regulatory gap but "we have to see how we can further put guardrails" to protect the interest of retail investors, Sebi whole-time member Kamlesh Varshney said on Friday.

Speaking at the 10th edition of the corporate governance summit, "Gatekeepers of Governance" here, Varshney said the market regulator moving away from control of a capital issue is a "right step", but at the same time stressed on the need to ensure that valuation by anchor investments take place properly, effectively and efficiently "I am not saying it's a regulatory gap, but it is something good for the thought --whether the valuation that is being carried out at this point of time is correct or not. We have seen a lot of IPOs are coming, where retail investors are challenging the valuation," he said.

The remarks came a day after Sebi (Securities and Exchange Board of India) chairman Tuhin Kanta Pandey on Thursday clarified that the capital markets regulator will not intervene in IPO valuations.

"We don't determine what the valuation is. This is (in) the eyes of the beholder, the investor," Pandey told reporters on the sidelines of an event here.

In the past, valuation concerns have been raised by many stakeholders, especially in cases of new-age or digital companies like Nykaa or Paytm's IPOs.

In a most recent case, concerns were raised on Lenskart's Rs 7,200-crore IPO priced at a very high level.

The eyewear firm came up with its IPO last week at a price band of Rs 382-402 per share, targeting a valuation of over Rs 69,700 crore at the upper end. The offers received 28.26 times subscription on the final day of the share sale on November 4.

Varshney said: "Now we think that when anchor investors are doing valuation, Sebi should keep itself away, which it is doing and which probably is the right thing, but without compromising on this position how do we ensure that valuation by anchor investments are also taking place properly, effectively, efficiently." He further said that another point of valuation where Sebi is involved is "valuation during corporate arrangements".

"There are other cases that we have seen where corporate arrangements are taking place and promoter shareholder probably get valuation at an inflated price to get a better swap allocation, which is detrimental of minority shareholders and lot of complaints we are receiving from these minority shareholders that their interests have been compromised," he said.

This is another regulatory gap, he said in his opinion, probably Sebi may have to work for in future.

"(Valuation) in the IPO area is not a regulatory gap but we have to see how we can further put guardrails. But in corporate arrangements valuation is one area. Can we provide guidelines for valuations the way there are guidelines in transfer pricing? This is one thing probably we may have to work with another regulator IBBI," he suggested.

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