IPO disclosures must be sharper: Sebi chief

MUMBAI: Sebi chief Tuhin Kanta Pandey on Thursday said that companies need to be more attentive about disclosures in offer documents for public offers, especially about risk factors, valuations and usage of funds.

He said that due to lack of adequate disclosures, the time taken for the regulator to clear an IPO document gets extended, which in turn stretches the time to raise funds. Inadequate disclosures also reduce transparency and weaken understanding of the offer documents by investors, he said. The Sebi chief was speaking at the 14th annual convention of the Association of Investment Bankers in India.

"Sebi continues to observe recurring disclosure gaps that reduce transparency and investor understanding. These gaps also lengthen the fund-raising timeline through repeated regulatory queries," he said. "We have identified key areas - risk factors, valuation rationale, objects of the issue, and use of proceeds - where disclosures must be sharper."

Sebi also expects greater business model clarity, with transparent revenue and cost drivers, Pandey said. "The management discussion and analysis should move beyond narration and explain the internal and external drivers of performance."

The Sebi chairman told the media that the regulator had agreed to NSE's settlement plea in its case related to unfair market access. The case relates to NSE offering preferential access to select brokers to its derivatives trading server in the early part of 2010s. The whole issue had come to light after a Singapore-based whistle-blower had exposed the wrongdoing.

Sebi investigations in this case is the main hurdle for the country's biggest stock exchange to go public through an IPO. In effect, an amicable resolution of the case that has been lingering for several years, would take the exchange a step closer to getting listed. It's been nearly 10 years that NSE has been trying to get listed.