SEBI Cautions Against Aggressive IPO Pricing

Indian market regulator SEBI has cautioned investment bankers against pricing IPOs too aggressively.
According to a recent study by the Business Standard, a quarter of the IPOs floated in India in the last two years are trading below their listing prices.
The recent IPO by Cairn India has been a big dampener for the primary markets. The issue was initially oversubscribed but many institutional investors withdrew their bids on the last day. The pricing of the issue was the main concern and many retail investors also cancelled their subscriptions after the issue closed. The stock listed at a discount and resulted in losses for many investors.
Year 2007 is expected to see 150 new issues in the Indian markets. The total funds that will be mobilized are estimated to be around 10 billion dollars. IPOs like Cairn could drive away the retail investor and make it difficult for smaller companies to raise funds from the primary market.