India’s market regulator probing three IPOs for inflating subscriptions
INDIA’S market regulator is investigating three initial public offerings (IPOs) for allegedly inflating the number of subscriptions received, its chairperson said on Friday (Jan 19).
The Securities and Exchange Board of India (Sebi) is working on measures to curtail such malpractices, Madhabi Puri Buch said, without mentioning details.
To improve the processing of public offer documents, the regulator is also examining whether in-principle approval can be given in cases where offers are facing judicial delays or issues from other regulators, she said.
Separately, Reuters had reported in November that the regulator is planning to ease capital and disclosure requirements for fund houses that run passive investment schemes. Buch said that a discussion paper outlining the proposed rules will be issued by March.
Ananth Narayan, a whole-time member at Sebi, said the regulator has observed that alternative investment funds (AIFs) were used to not just “evergreen” assets but also to violate India’s foreign exchange norms and bankruptcy rules. “Evergreening” means giving out a fresh loan to avoid default on an existing one.
“We will soon issue a consultation paper outlining general obligations of AIFs and the due diligence they need to undertake”, he said.
As part of easing rules for AIFs, Sebi will allow priority distribution in genuine cases, Narayan said, where a fund pays a certain category of investors before the others. Sebi had disallowed this practise last year in view of instances of “evergreening”.
He added that Sebi is also considering allowing AIFs to pledge the shares of the companies that they invest in. This will be allowed for infrastructure firms.
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