The Securities and Exchange Board of India (Sebi) missed an opportunity to initiate mandatory grading of IPOs (Initial Public Offerings) in its last board meeting, although the issue has been dragging on for well over a year. Last week’s sharp correction and violent price swings will probably make any regulatory intervention unnecessary. Several large companies, especially in the realty sector, are either postponing their IPO plans (like Orbit Corporation) or are reducing their offer price bands. Some are even reconsidering their listing plans. The big blow came last week, when three companies, barring MindTree Consulting, listed at steep discounts of 29 to 40 per cent.

This column has previously drawn attention to the massive price manipulation that occurs on listing day to settle pre-IPO financing arrangements. When companies begin to list at a big discount, such financiers are the first to vanish, scuttling the listing plans of dubious companies. If that happens, the grading process may become redundant.

Curious developments

The Stock Holding Corporation of India’s (SHCIL) e-stamping contract is now attracting the attention of government investigation agencies. After the massive fake stamp scam (Telgi scam) the government decided to launch electronic stamping of revenue documents and SHCIL bagged the mandate to become the Central Record Keeping Agency. IFCI, which has a 16.9 per cent stake in SHCIL, was a project consultant for awarding the e-stamping contract. The technology will come from Crimsonlogic Global of Singapore. Curiously, the Ministry of Commerce on 7 November 2006 permitted SHCIL to make the technology payment to Unitec Value Solutions Ptd Ltd, instead of paying Crimson Logic directly.

... contd.