India will tighten the IPO regulations and disclosure norms
Zomato, Policybazaar and Paytm went public last year trading lower than their debut prices
In the past 18 months more than half a dozen digital startups have underperformed, forcing India’s market regulator to toughen disclosure requirements for companies looking to file for an IPO.
The Securities and Exchange Board of India says that companies that want to raise money through public offerings will now be required by law to disclose their performance indicators and issue the pricing based on prior transactions and private fundraising rounds in their offer documents.
The regulator claims that private equity investors have had years to monitor and act on relevant data internally while retail investors have not had appropriate access to the key indications of a company whose shares they are purchasing.
Similar to the S-1 files that companies in the US and Canada benefit from, startups now have the option of pre-filing their offer paperwork and receiving a regulatory review.
Making educated selections is valuable for retail investors as investors are increasingly revising the values of late-stage businesses they have backed as the market shifts. SoftBank reduced its internal estimate of a formerly $10 billion company, the inexpensive hotel network Oyo, to $2.7 billion. The startup is looking for a valuation of over $10 billion.
