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SEBI’s discussion paper on IPO of new tech companies, what is Anil Singhvi’s opinion

According to this discussion paper of SEBI, the new age companies will have to give details of what the money raised from the IPO will be used. The lock-in period for anchor investors is proposed to be increased from 30 days to 90 days.

In order to make the primary market better and transparent, market regulator SEBI (SEBI) has issued a discussion paper on the IPO of new tech companies. In this, along with giving more disclosure to companies for IPO, it is proposed to increase the lock-in from 30 days to 90 days for anchor investors. On this move of SEBI, Anil Singhvi, Managing Editor of dgmartpro Business says that it is a good decision. The discussion paper is coming, further the decision will also come on it. This will prove to be a better move for retail investors.

What is SEBI Discussion Paper?

According to this discussion paper of SEBI, the details of what the new age companies will use from the money raised from the IPO will have to be given. According to the proposal, she will have to specify for what purpose she will use the IPO proceeds. Only 35 percent of the IPO amount has to be kept for inorganic growth. If they use more than this item, then they will get 35 per cent exemption from the limit if they specify in the offer document what they will acquire. Also, it is proposed to increase the lock-in period for anchor investors from 30 days to 90 days.

According to Sebi’s discussion paper, there is also a proposal to strictly sell stake to large investors through Offer for Sale (OFS). If there is more than 20 percent holding in a company, then only 50 percent will be allowed to be sold in the IPO. Apart from this, there is a proposal to monitor the amount of General Corporate Purpose.

What does Anil Singhvi say?

Anil Singhvi says, this move of SEBI should not be seen as strict for new age companies. This is not strict. SEBI is asking you to give more details. If companies are raising money from the market, then why are they raising money, tell them. This is strictly said. In IPO you are giving equity. This is more risky. I do not believe that it is strict. However, this discussion paper is very good.

Singhvi says, now hundred, two hundred and three hundred times are the times of increasing IPO. There are many reasons for this. For example, in the new age IPO, we write that we are doing inorganic growth. What is Inorganic Growth? We will buy any good company we see. We have money. As if there is an e-commerce company, the other will buy the e-commerce company.

SEBI is saying that if you want to grow inorganic, then keep a maximum of 35 per cent of the price of your IPO for that. For example, if you are bringing an IPO of 1000 crores, then do not put more than 350 crores for acquisition. If you still want to keep, you will have to specify what you are going to acquire. At the same time, organic growth means that the company will increase the business. As manufacturing is doing, so will the plant increase. If a company is in retail, then it will increase its stores. This is organic growth.

Singhvi says, whoever is coming with IPO, he does not know where he will invest the money. If you know, tell SEBI, tell the investor. This is a very good decision. Discussion paper is coming, further decision will come on it. The final guideline will come.

1 year lock in for anchor investors

Anil Singhvi says, the decision of 90 days lock-in is right for the anchor investor. This must be it. Anchor investors get in IPO. The retailer stands in line. If an IPO is getting doubled and tell retail investors to keep it for 30 days, they will keep it too. Why this facility only to big investors? If then you have to give this facility to big investors, then increase the lock-in period. If you are a big investor, then invest for a long time. My point is that it should not be 90 days but 1 year. 90 days is welcome, but it should be 1 year.

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