India has tightened scrutiny of IPO-bound firms by questioning how key internal business metrics are used to arrive at valuations, unsettling bankers and companies which fear delays in listing plans, sources with direct knowledge told Reuters.
The Securities and Exchange Board of India last month flagged concerns in proposing stricter disclosures, saying more and more new-age tech firms which "generally remain loss making for a longer period" were filing for IPOs, and traditional financial disclosures "may not aid investors.
One document from February containing SEBI's remarks to an Indian IPO-bound company, seen by Reuters, asked for "explanation regarding how KPIs form basis" for arriving at the IPO issue price, adding they should be "certified by a statutory auditor." Pranav Pai, founding partner at Indian VC firm 3one4 Capital, said SEBI was not setting any limits on valuations and only "bringing parity of information" between profitable and loss-making companies targeting IPOs.The tighter scrutiny comes when India's startups and other companies have become a darling for foreign investors and increasingly hit the markets.
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