<p>India's market regulator is increasing scrutiny of issue documents filed by companies going public, four sources said on Monday, amid a rise in initial public offerings in the Indian market.</p><p>The country's surging stock market has prompted nearly 50 companies to launch public issues in 2023; eight issues have been completed so far this year and another 40 are waiting for clearance from the Securities and Exchange Board of India (SEBI).</p><p>"The regulator has returned at least six public offer documents, as SEBI observed companies are misleading in their reasons for fundraise," said the first of the four people cited above.</p>.FPIs infuse over Rs 15,000 cr in debt market in February. <p>The regulator is particularly scrutinising what companies say they intend to use funds raised from the IPO for, these sources, directly familiar with the matter, said.</p><p>The sources declined to be identified as they are not authorised to speak to the media. SEBI did not respond to an email.</p><p>As per SEBI rules, funds raised via IPOs can be used for capital expenditure, debt reduction, general corporate purposes and acquisitions.</p><p>If funds are used to reduce debt, promoters will have their shares locked in for 18 months. However, if funds are being raised for capital expenditure, promoters have a three-year lock-in period.</p><p>'Promoters' is a regulatory classification in India that includes large shareholders who can influence company policy.</p><p>"By saying the company is using funds to retire debt, they (promoters) are circumventing the law and reducing the share lock-in period from three years to 18 months," the first person said.</p><p>An investment banker, who declined to be identified as discussions with the regulator are private, said SEBI has sought a detailed break-up of whether IPO proceeds are being used to retire debt taken for capital expenditure.</p><p>"This is making disclosures fairly cumbersome," they added.</p><p>Earlier this month, India's market regulator said it was investigating three IPOs for allegedly inflating the number of subscriptions received.</p><p>SEBI is working on measures to curtail such malpractices, chairperson Madhabi Puri Buch said.</p>
<p>India's market regulator is increasing scrutiny of issue documents filed by companies going public, four sources said on Monday, amid a rise in initial public offerings in the Indian market.</p><p>The country's surging stock market has prompted nearly 50 companies to launch public issues in 2023; eight issues have been completed so far this year and another 40 are waiting for clearance from the Securities and Exchange Board of India (SEBI).</p><p>"The regulator has returned at least six public offer documents, as SEBI observed companies are misleading in their reasons for fundraise," said the first of the four people cited above.</p>.FPIs infuse over Rs 15,000 cr in debt market in February. <p>The regulator is particularly scrutinising what companies say they intend to use funds raised from the IPO for, these sources, directly familiar with the matter, said.</p><p>The sources declined to be identified as they are not authorised to speak to the media. SEBI did not respond to an email.</p><p>As per SEBI rules, funds raised via IPOs can be used for capital expenditure, debt reduction, general corporate purposes and acquisitions.</p><p>If funds are used to reduce debt, promoters will have their shares locked in for 18 months. However, if funds are being raised for capital expenditure, promoters have a three-year lock-in period.</p><p>'Promoters' is a regulatory classification in India that includes large shareholders who can influence company policy.</p><p>"By saying the company is using funds to retire debt, they (promoters) are circumventing the law and reducing the share lock-in period from three years to 18 months," the first person said.</p><p>An investment banker, who declined to be identified as discussions with the regulator are private, said SEBI has sought a detailed break-up of whether IPO proceeds are being used to retire debt taken for capital expenditure.</p><p>"This is making disclosures fairly cumbersome," they added.</p><p>Earlier this month, India's market regulator said it was investigating three IPOs for allegedly inflating the number of subscriptions received.</p><p>SEBI is working on measures to curtail such malpractices, chairperson Madhabi Puri Buch said.</p>