The Securities and Exchange Board of India (Sebi) on Friday proposed that loss-making new age technology companies planning to list their shares should make disclosures about their key performance indicators (KPIs) considered for arriving at the basis of issue price in offer documents.
In a consultation paper, Sebi said such companies should make disclosures about their valuations based on issuance of new shares and acquisition of shares in the past 18 months before filing draft offer documents. Several new age companies, which do not have a track record of having an operating profit at least in the preceding three years, had tapped IPO route to raise funds. Some of them had fallen below their issue prices in the recent weeks.
These new age firms generally remain loss-making for a longer period before achieving break-even as they opt for ways to gain scale of operations rather than profits in the initial years. “The issuer company should disclose all material KPIs that have been shared with any pre-IPO investor at any point of time during the three years prior to IPO. However, for those KPIs which the issuer company deems are not relevant for the proposed IPO, the issuer should provide adequate explanation for considering those KPIs as not relevant with proper cross reference to a table disclosing the said KPIs,” Sebi said.