Sebi chairman has UK Sinha expressed concern over the decline in primary market activity.
Speaking on the sidelines of an investment outlook summit on Thursday, the Sebi chairman said the corporates had let initial public offerings (IPOs) worth about R60,000 crore lapse in the last three years, highlighting the difficulties they were facing in raising money from the public.
“India’s primary market had been rather muted in last 3-4 years. Sebi has cleared DRHPs, but the corporates have decided not to raise money and allowed the approval to lapse. It shows the appetite for raising capital has been low,” said Sinha.
As per Prime Database, IPOs worth R1,204 crore had hit the market in FY14, an 11-year low. Just Dial’s R919 crore IPO was the only major IPO to see the light of the day in FY14.
The only other major issue — Loha Ispaat’s recent R205 crore IPO — remained undersubscribed. FY13 and FY12 were comparatively better with total IPO collections of R6,497 crore and R5,892 crore respectively. While big issues have been conspicuous by their absense, SME IPOs have gained traction, with FY14 seeing over 35 SME IPOs. Sinha complemented BSE on the success of the BSE SME platform. “Creating companies with a market cap in excess of 1 billion dollars is a huge achievement and a matter of great satisfaction for all of us,” said Sinha. The market capitalisation of 55 companies listed on BSE SME platform exceeded the $1-billion mark on April 4, 2014.
The Sebi chairman said the regulator’s initiative to allow small firms to raise money without listing was beginning to bear fruit. “I am happy to say that within six months, three companies have listed through this route on BSE. I expect that once this platform succeeds, more qualified institutional bidders, PEs and VCs will use this platform as they can find better better price discovery,” said Sinha. The guidelines to list specified securities on the Institutional Trading Platform of a recognised stock exchange without an IPO were issued in October 2013.
Sinha said he was in favour of increasing the timings of the currency market from 5 pm to 7.30 pm as this would help the corporates to better hedge their portfolio. Speaking on corporate governance issues, Sinha said the regulator would particularly focus on the issue of 'related party transactions'.
Sinha said the regulator was in a constant dialogue with