Monday 13 May 2013
Sebi forces key changes to Justdial IPO
Justdial filed its offer document last year, it intended to sell shares amounting to just 10 per cent of the fully diluted paid-up equity share capital — it was looking for valuations of more than Rs 4,000 crore. According to rule 19 (2) (b) of the Sebi ICDR (Issue of Capital and Disclosure Requirements) Regulations, during an IPO, a company has to allot at least 25 per cent of its shares to the public.
However, there is an exemption. If the post-issue capital of the company, at the issue price, is more than Rs 4,000 crore, the company is allowed to go public with 10 per cent public shareholding. Subsequently, it is given three years to comply with the 25 per cent public shareholding requirement.
According to a source, Sebi wasn’t convinced with the valuation Justdial had sought, a valuation that would have given the company market capitalisation of more than Rs 4,000 crore. To convince Sebi, the bankers had to lower the valuation, which forced it to sell 25 per cent, instead of just 10 per cent, as envisaged earlier.
Though it is beyond Sebi’s mandate to decide IPO pricing, the regulator wanted to ensure the pricing was fair, the source said, adding the company’s promoters were asked to provide a ‘safety net’ feature for retail investors. While it was included in the red herring prospectus, the draft offer document filed by Justdial had no safety net feature.
However, there is an exemption. If the post-issue capital of the company, at the issue price, is more than Rs 4,000 crore, the company is allowed to go public with 10 per cent public shareholding. Subsequently, it is given three years to comply with the 25 per cent public shareholding requirement.
According to a source, Sebi wasn’t convinced with the valuation Justdial had sought, a valuation that would have given the company market capitalisation of more than Rs 4,000 crore. To convince Sebi, the bankers had to lower the valuation, which forced it to sell 25 per cent, instead of just 10 per cent, as envisaged earlier.
Though it is beyond Sebi’s mandate to decide IPO pricing, the regulator wanted to ensure the pricing was fair, the source said, adding the company’s promoters were asked to provide a ‘safety net’ feature for retail investors. While it was included in the red herring prospectus, the draft offer document filed by Justdial had no safety net feature.
