The Securities and Exchange Board of India (Sebi) may increase beef up the disclosure requirements for initial public offerings (IPOs) of new-age companies, reported Business Standard.
The decisions could be taken at Sebi’s board meeting scheduled for September 30. The regulator may see its board approve an amendment in the Issue of Capital and Disclosure Requirements (ICDR) Regulations to ask companies to provide a detailed explanation of how they price their IPOs, compare pricing to pre-IPO share sales, and disclose all the presentations made to pre-IPO investors.
Traditional metrics such as price-to-earnings (P/E) multiples, earnings per share (EPS), and return ratios cannot be applied to new-age companies or start-ups as most of them are loss-making firms.
The regulator is trying to partly address the issue by mandating companies to provide supplementary information and key performance indicators (KPIs) in their offer documents to help investors make more informed decisions, said a source.
Sebi has attracted some criticism following a meltdown in shares of new-age companies such as Zomato, Paytm and Policy Bazaar. At a recent event, Sebi Chairperson Madhabi Puri Buch said Sebi has no intention of interfering in the way IPOs were priced. She, however, pressed for more disclosures and transparency.