Fund managers cheer Sebi moves

Calling it a transparent and timely decision, the mutual fund and investment banking industry welcomed market regulator Securities and Excha...

Calling it a transparent and timely decision, the mutual fund and investment banking industry welcomed market regulator Securities and Exchange Board of India8217;s Sebi guidelines which specified higher contribution by qualified institutional bidders QIBs.

A cross-section of fund managers and market players said the regulator has brought in a level playing field in the IPO market and increased the role of mutual funds and retail investors.

Says Krishnamurthy Vijayan, CEO, JM Financial Asset Management Pvt Ltd: 8216;8216;It is an excellent measure for the mutual fund industry. While removing the discretionary powers in the process of share allocation, Sebi has increased the transparency of the same. The upfront margin system will also not affect the inflows.8217;8217;

Fund managers expect more fund inflow from the retail investors in the coming days. Many analysts said the manipulation in the IPO proces will also come to an end.

8216;8216;These measures were under consideration for some time and issuers will now have to launch IPOs under the new guidelines. India as a country has an exclusve way of doing things and the current regulation for proportionate allotment is another example of this,8217;8217; said S. Ramesh, executive director, Kotak Investment Banking.

In fact, the 5 per cent allocation for mutual funds within the 50 per cent QIB portion will also indirectly benefit the retail investors. 8216;8216;The market will have to wait and see how QIB investors strategise their pricing and demand decision for IPOs under the new framework,8217;8217; he added.

Small investor associations said they would be seeking more for the investors. 8216;8216;The 10 per cent margin imposition on QIBs is just the beginning and we expect Sebi to do more so that small investors and institutional investors are treated on par,8217;8217; said Kirit Somaiya, President of Investors8217; Grievances Forum.

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Said Sandesh Kirkire, CEO, Kotak Mutual Fund: 8216;8216;One can witness larger inflows in the equity markets. The retail participation in the markets has been low and the new framework will increase that. Wealth creation happens over a period of time and mutual fund industry plays an important role in that. The announcements should also boost the markets on expectations of larger inflows.8217;8217;

A fund manager who preferred anonymity said the Sebi should rework the guidelines for follow-on offerings and tighten the entry norms for the IPO market.

Sanjay Prakash, CEO, HSBC Mutual Fund: 8216;8216;The 5 per cent reservation in IPOs for mutual funds is good news. The decision to charge QIBs 10 per cent upfront margin will invite only serious bidders.8217;8217;