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Sebi proposes rules on pricing of IPOs

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Sebi proposes rules on pricing of IPOs

Mumbai: India’s market regulator plans to require new-age tech firms to justify the pricing of shares for their IPOs to ensure transparency, after shares in some of these companies crashed and eroded billions of dollars in investor wealth.

A discussion paper by the Securities and Exchange Board of India (Sebi) on Friday set March 5 as the deadline for public comment. Shares of some new-age tech companies like Paytm and Zomato have plummeted since going public.

Regulators want new-age tech companies to detail how they price shares in initial public offerings (IPOs), compare them to pre-IPO stock sales, and publish any pre-IPO investor presentations to help investors make decisions. a wise decision.

Sebi observed that many of these companies are going public without a solid track record of profitable operations for at least three years. These companies typically have been losing money for a long time before breaking even because they chose to scale rather than make profits during the growth phase.

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Some have gone public in the past year, hoping to capitalize on the stock market’s record rally. However, most are currently trading at a discount. Currently, the company only discloses earnings per share (EPS), price-to-earnings (P/E), return on equity (RoNW) and net asset value (NAV) and how these accounting metrics compare with peers, i.e. similar – the largest in the industry big company.

Such traditional parameters cannot be applied to new-age tech companies, Sebi said. It states that disclosures in the “Basics of Issuance Price” section must be supplemented, especially for loss-making companies, using non-traditional parameters such as key performance indicators (KPIs) and disclosing certain additional parameters such as transactions/fundraisings based on past valuations Activity.

“New-age startups that go public differ from traditional companies and this move is imminent as most startups are losing money. Before filing any offering documents, such companies should disclose estimates based on new offerings and acquisitions over the past 18 months. Current metrics may not be sufficient to give investors a clear picture of a company’s financial metrics. These new proposed reporting parameters will help investors make informed investment decisions related to these new age companies,” said Sonam, Managing Partner, KS Legal Chandwani said.

In his six-page paper, Sebi said such companies should disclose any key KPIs shared with any pre-IPO investors in the three years preceding the IPO.

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Oppn seeks probe into Adani charges in US: ‘Obvious protection of PM Modi’

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Oppn seeks probe into Adani charges in US: ‘Obvious protection of PM Modi’

Following US SEC charges of bribery against Gautam Adani, opposition parties criticise PM Narendra Modi and call for a JPC investigation.

As billionaire Gautam Adani faces charges in the US for alleged bribery and fraud, the Opposition on Thursday intensified its attack on the Centre over its alleged links with the Adani Group.

Gautam Adani has been charged in the US with allegedly paying $250 million in bribes to Indian officials between 2020 and 2024 to secure favourable terms for solar energy contracts. The scheme, prosecutors said, could have earned Adani’s group over $25 billion in profits.

Congress demands JPC probe

Reacting to the charges, the Congress called for a Joint Parliamentary Committee (JPC) probe into alleged scams involving Adani’s conglomerate. The party also demanded the appointment of a “new and credible” Sebi chief to investigate Adani’s financial dealings and compliance with securities laws.

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ALSO READ- At 65.2%, Maharashtra records highest voter turnout since 1995 assembly election

Congress leader Jairam Ramesh said the US Securities and Exchange Commission’s (SEC) actions highlight the failure of Indian institutions to investigate the group. “The indictment vindicates Congress’s demand since January 2023 for a JPC into the Modani scams,” Ramesh wrote on X.

He accused Prime Minister Narendra Modi of shielding Adani and claimed Congress’s “Hum Adani Ke Hain Kaun” (HAHK) series had exposed the businessman’s alleged fraud and his ties with the PM.

The fact that it has taken a foreign jurisdiction to properly investigate Adani only shows how Indian institutions have been captured by the BJP, and how decades of institutional development have been undone by greedy and power hungry leaders, the Congress leader said in another post.

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“All of this is consistent with a long record of fraud and criminality carried out with impunity with the obvious protection of the Prime Minister,” Ramesh charged.

Other Oppn leaders join attack

Other opposition leaders joined the attack. Trinamool Congress MP Saket Gokhale questioned the BJP’s involvement in Adani’s dealings and demanded an independent judicial probe.

Aam Aadmi Party leader Sanjay Singh accused PM Modi of allowing Adani to tarnish India’s global reputation.

ALSO READ- Adani Group shares plunge after US SEC charges, Adani Green down 16%

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Adani stocks latest updates

The allegations rattled markets, with Adani Group stocks plunging. Adani Enterprises fell 20 per cent in pre-open trade, while shares of Adani Ports, Adani Green, Adani Power, and others dropped between 7 per cent and 18 per cent.

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