Investment bankers becoming more transactional, not fair for firms to pay 20-30% fee; says SEBI's Ashwini Bhatia

Ashwani Bhatia, Sebi whole time director

Investment bankers are becoming more transactional rather they should focus on building long-term relationships, said Ashwani Bhatia, whole-time member of the Securities and Exchange Board of India (SEBI).

He added that a fee of 20 percent to 30 percent is not fair to any company that is looking to list. "Just imagine if a company approaches a bank and pays a fee of 30 percent; the next year, they will have to make provisions for it," Bhatia said. Similarly, he added that when a company is entering the capital markets, there should be a reasonable cost of raising capital.

Bhatia was speaking at the 13th annual convention of the Association of Investment Bankers of India (AIBI) in Mumbai.

Bhatia mentioned that there is enough patient and long-term capital available in the markets. Plus, there have been policy changes in simplifying the IPO process without compromising on investor protection, Bhatia added.

The whole-time member said that the regulators' efforts include relaxing norms for issuers that show strong business fundamentals but may not yet meet traditional size requirements. The same approach aims to make capital markets more accessible to small companies to raise funds and expand their businesses, Bhatia said.

Bhatia added more small and medium enterprises (SMEs) companies should come and list and few outliers in the space should not be seen as an impediment to capital raising.

Bhatia noted that startups in cities like Bangalore, Gurgaon, Hyderabad, and Pune are waiting in wings to raise capital.

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