New disclosure norms for past IPO returns

The new format requires merchant bankers to give information for three financial years, subject to a maximum of 10 IPOs.  However, it will be applicable to draft IPO prospectus filed with Sebi on or after November 1, the circular said.

The circular comes two months after its July 28 announcement this year, when it made mandatory for merchant bankers to provide details of their track record in the IPO application forms. They were also asked to keep detailed record of due diligence process for IPO pricing.   Merchant bankers are responsible for arriving at a price for an IPO either individually or through a syndicate. The idea is to look at returns from an IPO investors’ perspective as such a need  was felt on account of the disappointing post-listing performance of a number of IPOs in the recent past.

As per the new format, there are two tables; the first one is for details on specific issues with opening and closing price on the opening date and closing price details on the 10th, 20th and 30th calendar day from the listing day. These are compared with the benchmark index on the same day. At the same time, there has to be a separate table for each merchant banker attached to the issue.

The second table is a summary of price performance of IPOs in a given financial year; it details the percentage of IPOs trading at a discount and at a premium on the listing date and on the 30th calendar day from the listing day.

With this, Sebi has made it easy for an investor to see how the merchant banker’s previous issues have fared.

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