Retail investors shouldn’t rush into IPOs, wait for prices to stabilise, says SEBI chief Buch

The price discovery mechanism of initial public offerings (IPOs) is “imperfect” and retail investors investing for the long-term should wait for prices to stabilise, Securities and Exchange Board of India chairperson Madabhi Puri Buch has said.

Speaking at AIBI Annual Convention 2023-24 on January 19, Buch also expressed concern over malpractices such as mule accounts, inflating of IPO application numbers to give an impression of high subscription, and applying in a manner that the application gets rejected. SEBI was working to resolve these issues, she said.

“The listings in last few years have been a mixed bag and therefore the acknowledgement that IPO pricing is at best a judgement of various players and that it can go either way, and therefore retail investors can wait until price discovery is more stable,” Buch said.

For retail investors, and not retail traders who flip within the first few weeks, there is no hurry or impact cost, she said.