Investors may retain IPO subscription
0 views
Skip to first unread message
K.Karthik Raja
Apr 9, 2008, 6:48:10 AM4/9/08
to Kences1
Investors may retain IPO subscription
The question is why does the money have to leave the investor's
account when he just applies: Bhave.
The Securities and Exchange Board of India (Sebi) hopes to allow
investors to hold subscription amounts for initial public offerings
(IPOs) in their bank accounts until allotment. This is to cut the time
between the stock sale and listing.
The market regulator hopes to take a decision in this regard in the
next three months, Sebi chairman C B Bhave told reporters at the Ernst
and Young IPO Transformation Conclave -- 2008.
"It is our belief that with the present technology it is possible to
earmark the amount in the investor account itself and not have the
money actually transferred," he said.
"For this we need to talk to different players involved to see that it
is operationalised initially on a voluntary basis, and so keep both
options open and slowly push it," he added.
The Sebi chief said that there were a host of issues plaguing the IPO
market and that it could see some action in the coming months.
"Market intermediaries are going around a very important question and
that is -- why does the money have to leave the investor's account at
all when he applies for an IPO and when he is not going to get
anything? We have no business to sit on that money. We will focus on
that issue," he said.
Bhave had last month said that the board would review the IPO process
to reduce the time between the sale and listing and make it more
efficient.
In a guarded criticism of pricing of issues in the primary market, he
said merchant bankers and issuers were on the same side of the
table.
"There is a perception that just because the markets came down, it is
a bad time for IPOs. I would urge you to consider if it is that, or is
it the pricing? Rather than looking at the western markets where
liquidity is drying up, we must focus on Indian companies, which are
acquiring firms abroad and going to need the capital. Are we, as
market intermediaries, failing somewhere in not providing the proper
bridge for these companies to access financial resources?" Bhave
said.
About 30 companies, whose draft offer documents have been cleared by
the regulator, have not gone ahead with the IPOs, citing weak market
conditions.
Several major IPOs, including Wockhardt Hospitals, Emaar-MGF and SVEC
Constructions, were withdrawn in February and March. This was after
the closure of the Reliance Power IPO that garnered a large number of
applications but plunged on listing.
The Sebi chairman also spoke about a platform for small and medium
enterprises (SMEs). "The focus is on the top companies in the market.
We have collectively failed to provide a good market for SMEs. We need
to look at any segment where these can come in as well," he said.
Earlier, attempts have been made with the introduction of the Indonext
platform on the Bombay Stock Exchange, but it has not really taken
off.
The question is why does the money have to leave the investor's
account when he just applies: Bhave.
The Securities and Exchange Board of India (Sebi) hopes to allow
investors to hold subscription amounts for initial public offerings
(IPOs) in their bank accounts until allotment. This is to cut the time
between the stock sale and listing.
The market regulator hopes to take a decision in this regard in the
next three months, Sebi chairman C B Bhave told reporters at the Ernst
and Young IPO Transformation Conclave -- 2008.
"It is our belief that with the present technology it is possible to
earmark the amount in the investor account itself and not have the
money actually transferred," he said.
"For this we need to talk to different players involved to see that it
is operationalised initially on a voluntary basis, and so keep both
options open and slowly push it," he added.
The Sebi chief said that there were a host of issues plaguing the IPO
market and that it could see some action in the coming months.
"Market intermediaries are going around a very important question and
that is -- why does the money have to leave the investor's account at
all when he applies for an IPO and when he is not going to get
anything? We have no business to sit on that money. We will focus on
that issue," he said.
Bhave had last month said that the board would review the IPO process
to reduce the time between the sale and listing and make it more
efficient.
In a guarded criticism of pricing of issues in the primary market, he
said merchant bankers and issuers were on the same side of the
table.
"There is a perception that just because the markets came down, it is
a bad time for IPOs. I would urge you to consider if it is that, or is
it the pricing? Rather than looking at the western markets where
liquidity is drying up, we must focus on Indian companies, which are
acquiring firms abroad and going to need the capital. Are we, as
market intermediaries, failing somewhere in not providing the proper
bridge for these companies to access financial resources?" Bhave
said.
About 30 companies, whose draft offer documents have been cleared by
the regulator, have not gone ahead with the IPOs, citing weak market
conditions.
Several major IPOs, including Wockhardt Hospitals, Emaar-MGF and SVEC
Constructions, were withdrawn in February and March. This was after
the closure of the Reliance Power IPO that garnered a large number of
applications but plunged on listing.
The Sebi chairman also spoke about a platform for small and medium
enterprises (SMEs). "The focus is on the top companies in the market.
We have collectively failed to provide a good market for SMEs. We need
to look at any segment where these can come in as well," he said.
Earlier, attempts have been made with the introduction of the Indonext
platform on the Bombay Stock Exchange, but it has not really taken
off.
Reply all
Reply to author
Forward
0 new messages