India’s securities regulator SEBI is investigating six investment banks over high fees charged in small business IPOs, with some fees reaching 15% of funds raised, far exceeding the usual 1-3%. The confidential probes, initiated earlier this year, aim to address malpractice in the IPO market.
In India, SMEs with turnover of Rs 5-250 crore list separately on BSE and NSE with fewer disclosure requirements. SEBI’s probe suggests banks charge high fees to ensure oversubscription by coordinating bids, which are often withdrawn later to attract more investors. Last fiscal year, 205 small firms raised Rs 6,000 crore. SEBI plans tighter rules to curb malpractice, having already capped first-day share gains at 90%. It is working on 12-15 reforms for SME IPOs.
Sebi has probes that Six Banks are charging fees 15% on SME IPO
