Sai Silks to offer safety net scheme to retail investors

Mumbai, Feb 7 (PTI) Apparel retailer Sai Silks Kalamandir, which is coming out with an IPO next week, would offer a safety net scheme to its prospective retail investors for six months after the close of the issue. "We are raising Rs 89 crore through the IPO with safety net scheme to safeguard the interest of retail investors," Sai Silks Chairman and Managing Director Chalavadi Durga Prasad told reporters here. The promoters of the Hydrabad-based company will provide safety net to original retail allottees if the market price of the share falls below the issue price within six months of listing by offering to buy back up to a maximum of 1,000 shares at the issue price, Prasad said. Sebi regulations provide for offering safety net to investors in IPOs but not many companies have gone for it. As per records, Usher Agro had offered safety to investors when it came out with its IPO in 2006. Sebi Chairman U K Sinha had recently raised concerns regarding manipulation in the IPO pricing and criticised the investment bankers for wrong pricing. The regulator also circulated a discussion paper on making offering of safety net mandatory to ensure investment bankers are fair in fixing IPO prices and investors do not lose money unreasonably. "Pricing of IPOs has been an issue. Two-thirds of the issues are trading below issue price even after adjustment with the overall market decline. In my opinion, we must introduce a safety net mechanism, may be in a milder form, to send a signal to the bankers that the pricing has to be right," Sinha had said. Sai Silks is coming out with an IPO with a price band of Rs 70-75 per share. Out of the total proceeds from the issue, Rs 12.73 crore will be utilised for setting up retail outlets, Rs 0.91 crore for pre-payment of term loans, Rs 8.50 crore for brand promotion and Rs 59.99 crore as working capital. The issue opens on February 11 and closes on 13. PTI AP BEN ABC RAH mr DKR SRE