A few months ago, 17 investor associations in one of their regular interactions with the Securities and Exchange Board of India (Sebi) passed a unanimous resolution appreciating the regulator’s tough stand on the DLF issue. That was when Sebi had refused to clear DLF’s earlier proposal to relist its shares and raise Rs 13,500 crore from the capital market.

Sebi had refused to clear the initial public offering (IPO) until the ministry of company affairs (MCA) resolved the issue of DLF’s minority shareholders. A little later, the regulator raised pertinent questions about the absurd disparity in the valuation of DLF’s land bank as well as the quality of its disclosures. In fact, Sebi told its board of directors that the runaway increase in realty valuations was triggered by DLF’s fund-raising plans and the manner in which DLF’s properties were valued. In that board meeting Sebi cleared the proposal of IPO ratings after accepting that investors do need expert help in understanding complex disclosures.

But only a part of the original investor concerns were addressed when Sebi finally cleared its revised prospectus (for the record, Sebi only offers comments on the offer document and does not specifically clear it). Investor associations which praised Sebi’s handling of DLF in the past, aren’t too happy with the regulator anymore. They are surprised that the new valuation norms applicable to DLF conveniently, do not apply to the issue nor did the IPO have to be rated.

In fact, Midas Touch Investors Association, a Sebi registered group, insists that disclosures in the DLF prospectus remain inadequate. It says that though Sebi had assured the association that the lead managers to the issue would be asked to respond to its concerns, the IPO was cleared without this happening. Specifically, it has questioned the lack of transparency about the big increase in profits through sales to group companies, it has not received any reply. If that happens to an investor association, how is an ordinary investor, whose awareness level is poor, assess a complex public offering?

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