Merchant bankers, check IPO-bound SMEs: Bourses

September 26, 2024 10:30

Amid concerns over the quality of issuances by small and medium enterprises (SMEs) and rising instances of violations, stock exchanges have urged investment bankers to enhance scrutiny and ground checks before filing documents for an initial public offering (IPO).

The developments come close on heels of market regulator Securities and Exchange Board of India's (Sebi's) nudge to BSE to halt the listing of a recent SME firm following complaints from industry participants.

Also, according to latest reports, six merchant bankers are under the scanner of Sebi for questionable practices on fee collection.

In a meeting held on Tuesday, BSE's MD and CEO Sundararaman Ramamurthy had apprised over 80 merchant bankers across India for more checks on IPO-bound companies.

"Exchanges are asking merchant bankers to do thorough due diligence based on the stock exchange checklist, specified under the guidelines of Sebi. They are considered to have better financial acumen and have been asked to do more site visits and ground checks of the companies,' said a person familiar with the developments.

"The strictures come after several discrepancies have come to light at the stock exchange level and could have been easily detected by merchant bankers before filing IPO documents. There have been cases where companies showed a need for working capital but had sudden jumps in inventories or jacked up their financial numbers right before the issue," said sources.

-- Khushboo Tiwari/Business Standard

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