Guardrails in IPO Valuation: A Call for Enhanced Investor Protection

Sebi's whole-time member, Kamlesh Varshney, has highlighted the need for protective measures in the valuation of initial public offerings (IPOs) to safeguard retail investors' interests. He emphasized conducting valuations by anchor investors properly and efficiently without direct regulatory intervention.

Varshney's comments came during a recent corporate governance summit, where he acknowledged that while the market regulator stepping away from capital issue control is correct, the focus remains on ensuring valuations are effectively handled. Past cases, like Nykaa, Paytm, and Lenskart's IPOs, have raised concerns about inflated valuations.

Sebi Chairman Tuhin Kanta Pandey clarified that they will not determine IPO valuations. Varshney proposed considering guidelines for corporate arrangements valuations, similar to transfer pricing rules, indicating potential collaboration with other regulators like IBBI.