Sebi proposes new IPO rules that may spoil the game for startups
The Sebi wants technology firms to justify their pricing of stocks for their initial public offerings. The rules were proposed after a meltdown in shares of some of these businesses. In a recent consultation paper, the Securities and Exchange Board of India (Sebi) urged that new-age technology companies justify their share pricing for initial public offerings to maintain transparency. The new limits came in the aftermath of a stock market catastrophe in some of these companies, destroying billions of dollars in investor equity. A private-sector bank's investment banker predicted, "It's not going to be easy to list new-age enterprises. Whenever there is a disclosure in the draught IPO filings, there must be a backup for the financial information these companies have provided; more critically, auditors must be willing to validate it." These are usually mobile-first firms like Zomato and Ola that leverage technology to challenge traditional businesses. Mor...