This has reference to the editorial,” Leave IPO pricing alone” ( Business Line , Jan.17). In this regard, I feel that pricing should not be decided by the regulator, but the regulator must keep a watch on the way pricing is arrived at by a company. This is essential as this will ensure long-term growth of the equity market and equity culture in the country.

There are many examples not just in India but across the world where companies issuing shares along with investment bankers and issue managers tend to manipulate price and try to extract maximum price from the investors.

While this practice makes the promoter rich, investors, particularly retail investors, find themselves cheated and tend to shun the primary market. Investors in the Facebook IPO had a similar experience at the international level.

Another important issue in the context of IPOs is that the regulator should always analyse the corporate governance practice being followed by a company. Companies found wanting in corporate governance and guilty of manipulation of share prices should be restricted from accessing capital from other sources as well, such as raising debt.

Last but not the least, SEBI needs to keep a strong watch on the so-called grey market. Vivek Sharma

Navi Mumbai

Fair practices

This is with regard to “Leave IPO pricing alone”, ( Business Line , Jan.17). Promoters are normally greedy and lead managers work for a fee, both ignoring fair practices. Pricing should be determined on the past financials/track record, when the issue is dealt with in the primary market and should not be on the future perceptions/expectations for which secondary market exists.

The economy grows when the savings of small investors are used for new projects and expansions (in primary market) rather than when used for trading of securities (secondary market).

R.S. Raghavan

Bangalore

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