Pricing of Shares and Use of IPO Proceeds

The Minister for Corporate Affairs has said that as per the information provided by the SEBI, Initial Public Offerings (IPO) price is fixed by the issue based on an analysis of the quantitative and qualitative factors of the issue company, market sentiments, demand for the scrip as assessed during road shows etc. Giving this information in written reply to a question in the Rajya Sabha the Minister for Corporate Affairs, Shri Salman Khurshid said that the freedom to fix the price band rests with the issuer, who generally does so in consultation with the merchant banker. He informed the House that as per the data received from Bombay Stock Exchange (BSE), on an analyses of IPOs listed during the period April 1, 2009 till November 4, 2010, as many as 48 out of the 75 IPOs listed during the period have closed above the issue price on the date of listing. Further 42 IPOs out of the said 75 IPOs are quoting above their issue price as on November 08, 2010.

Shri Khurshid also informed that an Expert Group had been appointed to study and suggest measures to monitor the targeted utilisation of the fund raised through IPOs and the report of the Expert Group is under examination of the Ministry.