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SEBI to Simplify Regulations, Revises IPO Anchor Investor Norms; Chairman Reiterates Non-Interference in Valuations
Amid concerns over high IPO valuations, particularly among new-age companies like Nykaa and Paytm, SEBI Chairperson Madhabi Puri Buch Pandey has urged firms to show greater commitment to ESG principles and responsible governance. Speaking on Thursday, she emphasized the need to simplify regulations, promote innovation, and strengthen accountability.
Amidst concerns about high valuations in IPOs, SEBI Chairman Tuhin Kant Pandey clarified that the capital markets regulator will not interfere. "We do not determine valuations; it is in the eye of the beholder, the investor." Concerns were raised about Lenskart's ₹7,200 crore IPO being priced too high. Pandey clarified that the market should independently determine pricing based on opportunities.
There have been concerns about high IPO valuations in the past, especially in the case of new-age companies like Nykaa or Paytm. Pandey called upon companies to be more committed to their ESG promises. Pandey said on Thursday, "From a regulatory perspective, there is a need to curb regulatory overreach and promote innovation and accountability."
Pandey said, "We will review several regulations in consultation with the industry and investors to make them simple, relevant, clear, and updated. Company directors and senior management should strengthen their capabilities in key areas such as cyber risk, behavioral science, data ethics, and sustainability."
SEBI has revised the share allocation structure for anchor investors in IPOs to attract higher participation of domestic institutional investors such as mutual funds, insurance companies, and pension funds. The total reservation for the anchor portion has been increased from 33% to 40%. This would comprise 33% for mutual funds and 7% for insurance companies and pension funds.
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If the 7% reserved for insurance companies and pension funds is not filled, it will be allocated to mutual funds. For IPOs with an anchor portion of more than ₹250 crore, the current limit for increasing the number of anchor investors has been increased from 10 to 15 per ₹250 crore.
An additional 15 investors will be approved for every additional ₹250 crore or part thereof, subject to a minimum allocation of ₹5 crore per investor. The rules will come into effect from November 30.
