Corporate rivals try to scuttle IPOs: UK Sinha, Chairman, Sebi

MUMBAI: Corporate rivals are running down initial public offers, according to UK Sinha, chairman of capital market regulator Sebi. "I am finding that any company coming for IPO, there are a large number of complaints raised against that company and my gut feeling is that those complaints are not necessarily from investor or investor associations. My feeling is that a good portion of those complaints are also promoted by the competitors," he said at the CII Capital Markets Summit here on Wednesday.

Sinha said he increasingly finds corporates setting up offices just to track competition. "Privately, many corporates tell me that if they want to do business, it has become important for them to set up a separate office to watch their competitors. "

Corporate Espionage

People are setting up offices to look at their competitors," Sinha added.

Corporate espionage in various forms have existed for decades, but in recent times many companies, particularly those with aggressive PR machinery, have tried to influence opinion and provoke investor activist groups to attack competitors in the run-up to fund-raisings or acquisitions.

"Now, there is need for introspection on what depth we are going into because you can harm your competitor and your competitor can harm you and then in the end, India will be harmed. If somebody is doing something wrong, there are systems to take care of it. I am sure that there are also advisory firms and they are doing a very good job. But why should you set up entities to look at what your competitor is doing and how to find fault with him and how to stop him from doing something. I am sorry to mention it, but I am seeing more and more instances of this. Such activities were there in other activities of social life in India. But it has now also percolated into Corporate India," said Sinha.

Speaking at the occasion, Chitra Ramakrishna, joint managing director of National Stock Exchange, said, "It is certainly something that we are seeing now." She said while it is possible that some of this happened earlier as well, the trend of companies complaining about competitors has become much more perceptible now. That said, she added, many companies receiving approvals and completing paperwork for IPOs were not coming out with the offerings. "I think they are still waiting for more positive sentiment across markets," she said.