The Securities and Exchange Board of India (SEBI) is planning to strengthen the framework for Key Performance Indicators (KPIs) introduced two years ago for IPO-bound companies. This move aims to enhance transparency, particularly for digital companies and start-ups that lack a proven profitability track record.
The KPI framework was initially introduced in 2022 following a surge in IPOs of start-ups like Zomato, Paytm, Nykaa, and Policybazaar. These companies faced criticism for steep valuation declines post-listing, raising concerns about IPO pricing and transparency. The rules currently mandate companies to disclose past transactions and fundraising details, including the prices of shares sold in the 18 months before an IPO.
Sources say SEBI is not very happy with the existing disclosure standards and has sought industry feedback on improving the guidelines. The regulator wants to ensure that investors get better data as many digital firms plan IPOs, especially after valuation corrections in a number of start-ups.
SEBI was earlier quite strict about KPI disclosures and sought detailed explanations for variations in KPIs, especially if the same affected IPO valuations. Key examples are FirstCry, which refilled IPO documents early this year with additional KPIs after it took off its $500-million IPO draft.
The tightened norms would address the concerns of investors regarding fair pricing and bring in greater accountability in the evolving capital markets of India.
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Source: Moneycontrol
News Desk
