Investment bankers and primary market watchers said the Securities and Exchange Board of India (Sebi) has tightened checks on IPO-bound companies after investors lost money in some of last year’s public offers, delaying approvals to launch issues.
The average time lag between filing an offer document with Sebi and receiving approval in 2022 has risen to 115 days – the highest in eight years, show data compiled by primedatabase.
Last year, the SEBI cleared 92 IPOs in an average of 75 days. In 2020, Sebi cleared 22 IPOs, and the time taken was 76 days on average. In the previous two years, IPOs were cleared in less than 100 days from the time of launching and filing the offer documents.
“The increase in time clearing offer documents this year can be attributed to the deluge of filings, thus increasing the workload and also due to greater due diligence being exercised after investors lost money in a few big bang IPOs that were launched last year,” said Pranav Haldea, managing director, Prime Database Group.
Out of the 66 listings that happened in 2021, 27 are still trading below the issue price. The IPO market record of 2022 has been better, with 18 out of the 23 listings trading above the issue price.
Among some recent issues, the 7,300 crore IPO proposal of Blackstone-backed Aadhar Housing Finance took 466 days for Sebi approvals. Tamilnad Mercantile Bank’s IPO was approved in 268 days.
Hemani Industries, a maker of agrochemicals and speciality chemicals, which was planning to raise 2,000 crore through the IPO, took 198 days for the Sebi approval. It took Biba Fashion, planning a 1,500 crore IPO, about 182 days to get its offer document cleared, while Flipkart co-founder Sachin Bansal-led fintech start-up Navi Technologies, Kaynes Technology India and Bharat FIH took about 170 days to get the final nod to launch their share sales.
Sebi’s vetting process has grown longer and become stricter with the regulator seeking clarifications on finer details in the filings, said bankers and market participants in the know.