‘Use of IPO funds to become transparent with new rules’
The Hindu
‘Cap on acquisition portion serves interests of investors’
Tighter norms approved earlier this week by the Securities and Exchange Board of India (SEBI) for Initial Public Offerings (IPOs) will bring in transparency and discipline to the process, said analysts.
Several new-age tech firms have in recent months raised significant sums for purposes of acquisitions without having identified target firms. Tweaked norms capped the amount that can be raised in this way. The regulator also put in place a mechanism to monitor the deployment of proceeds.
“To stitch together a higher valuation, several new-age tech companies mentioned vague ‘objectives’ in the offer documents without making it clear,” said Geetanjali Kedia, primary markets head, SP Tulsian Investment Advisers.