The Securities and Exchange Board of India’s (Sebi) crackdown on price rigging in the

RELATED ARTICLES 3 companies withdraw IPOs amid weak market conditions this year

initial public offerings (IPOs) of seven companies triggered a collapse of their share prices on Thursday, as its chairman UK Sinha told TV channels that the regulator was overhauling the IPO process to prevent such price manipulations in future. Sebi on Wednesday barred these co­m­p­anies and their promoters from accessing the securities market. The stocks saw a sharp decline in prices after nervous investors sold their positions, analysts said. Shares of PG Electroplast and Onelife Capital Advisors fell around 20 per cent each in the first hour of trade before they saw a partial recovery. PG Electroplast was the biggest loser with shares closing 17.27 per cent lower at Rs 157.80, followed by Bharatiya Global (down 9.89 per cent) and Brooks Laboratories (9.83 per cent).

Shares of the remaining four firms fell over four per cent — Onelife Capital Advisors (7.75 per cent), RDB Rasayans (4.95 per cent), Tijaria Polypipes (4.93 per cent) and Taksheel Solutions (4.73 per cent). Shares of Onelife Capital advisor recovered from day’s low of Rs 194 (a fall of 19.99 per cent) to close at Rs 224.25. Sensex fell 1.17 per cent (183.82 points) to 15543.93 on Thursday.

Sebi has been trying to bring in tighter rules for IPOs. For instance, the regulator has asked investment bankers to disclose share price movements of past IPOs by investment bankers on draft red herring prospectus effective from November 1. Coincidentally, no IPO has hit the market since then. Market analyst SP Tulsiyan said Sebi should make book running lead managers (BRLM) accountable for the IPOs brought out by these companies. “It is only with the collusion of BRLM that promoters are coming to the market to raise money. They are being misguided by BRLM,” he said.

Tulsiyan said the propos­ed new IPO guidelines shou­ld make lead managers responsible. Sebi, in its order on Wednesday, said promoters of these companies were funding operators through IPO money to ramp up share prices after listing on the bourses. Shares of these companies had seen huge volatility immediately after listing as promoter-operators tried to manipulate the share prices. In separate orders, Sebi has banned promoters of these companies, top executives, merchant bankers and the operators involved in price manipulation from accessing and dealing in the market till further orders. Sebi has also directed these seven firms to bring back the unutilised IPO proceeds deployed by them in their subsidiaries by way of inter corporate deposits (ICD) as well as in mutual funds and deposit them in an interest-bearing escrow account of a scheduled commercial bank within seven days from the date of the order.

Almondz Global Securities that acted as merchant banker for the IPO of PG Electroplast has been prohibited by Sebi from taking up primary market issues. However, shares of Almondz closed in the black with 2.08 per cent gain.