Having lost around Rs 147,600 crore ($ 18 billion) in the IPO market during 2022, the investing public is now ultra-suspicious of the new issue market, unscrupulous promoters and their greedy advisers in the form of merchant bankers. But the promoter-merchant banker combine — fearing that its honeypot, the Indian IPO market, will lose steam during 2023 — continues to paint the mirage of overnight riches for innocent investors who are naturally lured by this prospect. And despite the harsh reality of post-IPO plunges in stock values, the game of luring investors with the hype of making them wealthy overnight through subscription to high-priced IPOs continues unabated.

Investors have been duped by the hype created over technology issues like PayTM, Zomato, AGS Transport Tech and Rainbow Chidren’s Medicine, as well as by Life Insurance Corporation, Ethos, Prudent Corporate Advices, Uma Exports, Nykaa and Cartrade. Post IPOs, these stocks have sent shivers down the spines of investors as most of these exorbitantly priced scrips have lost value substantially, either immediately after getting listed or after some time.

With the investing public losing a humongous amount of around Rs 147,600 crore, they are in no mood to listen to the pied pipers in the form of merchant bankers. But the unscrupulous promoter-merchant banker combine is not giving up and is doing its best to bring disgruntled investors back to the market.

In fact, promoters and merchant bankers are getting ready to ‘present’ over 50 IPOs in the new year. These may include Droom Technology, Snapdeal Ltd, TBO Tech, Capillary Technologies, Protein eGov Technologies, Letravenues Technologies, Asianet Satellites Communications, CMR Green Technologies and Oravel Stays (OYO). In fact, the hype over these issues is already being propagated by merchant bankers.

The crux of the issue is the exorbitant pricing that these promoters and their merchant bankers decide for IPOs. In this connection, one fails to understand why market regulator SEBI is not focusing on its core obligation of regulating the functioning of the capital market and protecting the interests of the investing pubiic. While SEBI continues to tinker with IPO rules and regulations, it has paid scant attention to the major problem of the uncalled-for exhorbitant pricing of IPOs. On the contrary, it seems to have given a free hand to promoters and merchant bankers whose primary target is the innocent retail investor.

Contrastingly, the new issue pricing policy adopted by the Controller of Capital Issues in an earlier era had gone a long way in spreading the equity cult far and wide. Ironically, the working of its successor, SEBI, is proving to be detrimental to both the investing public and the health of the equity cult in the country.

If one compares the prices fixed by the CCI of several multinational companies in the days when the latter were asked to dilute their foreign holding with the prices being charged by our promoter-merchant banker combine of say PayTM, Reliance power, Life Insurance Corporation, Uma Exports, Zomato, AGS Transport Tech, Fino Payments Bank, one will be shocked that these ordinary companies have priced their stock at a much higher level than even giant multinational companies. It is intriguing that SEBI remains a silent spectator to such a 'tamasha'. Today's merchant bankers should be congratulated for their ability to palm off shares of even loss-making companies at prices higher than those of multi-bagger multinationals! The time has come for SEBI to develop a mechanism to regulate IPO pricing policy to prevent promoter-merchant banker combine to openly loot the hapless investors.