With IPOs losing steam, Sebi steps in with hard underwriting move

Watchdog looks to clear air for allowing investment bankers to buy unsubscribed portion of a share sale

Samie ModakSundar Sethuraman Mumbai

The Securities and Exchange Board of India’s (Sebi’s) proposal to re-introduce “hard underwriting” is seen as step to boost India’s moribund initial public offering (IPO) markets. The regulator has proposed that in case an IPO fails to garner full subscription, the investment banker or a third-party can buy the unsubscribed shares.

This practice was common during fixed-price issues prior to 1999. However, under the new book building regime, underwriting is allowed only to the extent of shortfall due to technical rejection of bids — this is referred to as “soft underwriting” and is rarely invoked. 
Based on market feedback, Sebi has plans to amend the Issue of Capital and Disclosure Requirements (ICDR) Regulations — the rule book for raising public funds — to clear the air between soft and hard-writing. Industry players believe that with the s

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First Published: Feb 23 2023 | 7:33 PM IST

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