Delhivery sets IPO price band at Rs 462-487: Proceeds to be used to fund growth Logistics services player Delhivery will price its shares in a band of Rs 462-487 for its forthcoming initial public offering (IPO) aimed at raising up to Rs 5,235 crore. At the upper end of the price band, the company will be valued at Rs 35,284 crore, Delhivery said at a virtual press conference. The IPO will open for subscription on May 11. The Gurugram-headquartered company has pruned the IPO size by about 30% to Rs 5,235 crore, from Rs 7,460 crore earlier, opting to play it safe after the Rs 21,000-crore IPO of Life Insurance Corporation (LIC). The offer for sale (OFS) component will be worth Rs 1,235 crore while the public issue now comprises shares worth Rs 4,000 crore. Private equity (PE) investors Carlyle Group and SoftBank as also the co-founders of the company will be selling shares. Currently, SoftBank has a stake of 22.78% while Carlyle owns 7.42%. Bharti owns 1.11%, Tondon has 1.88% and Saharan holds a 1.79% stake. The company said 75% of the issue has been reserved for qualified institutional investors, 15% for non-institutional investors and the remaining 10% for retail investors. In addition, the company has set aside shares worth Rs 20 crore for eligible employees, who will get a discount of Rs 25 per equity stock during the bidding process.Investors can bid for a minimum of 30 equity shares and in multiples thereof. Delhivery reported a loss of Rs 891. 1 crore for the nine months to December, 2021, compared with a loss of Rs 297.5 crore in the corresponding period of 2020. The company reported a loss of Rs 415.7 crore in FY21. The company’s total income for the nine months to December, 2021 stood at Rs 4,911.4 crore, compared with Rs 2,806.5 crore in the year-ago period. Total expenses rose to Rs 5,810.2 crore from Rs 3,062.7 crore with freight handling and servicing costs shooting up. With several IPOs of start-ups faring poorly after listing, Sebi had in mid-February initiated a discussion on disclosures put out by them to explain the basis of the pricing. The regulator proposed that in addition to the financial parameters, new-age technology companies should disclose some details of KPIs (key performance indicators). To ensure the data is authentic, the regulator wants it should be audited. Delhivery provides an end-to-end logistics solution, including warehousing services and a range of value-added services.
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In its consultation paper, Sebi has suggested that trustees of mutual funds should focus on market abuse by AMC, its employees and mis-selling by the AMC to increase the asset base.
Also, trustees should be responsible for fairness of fees and expenses charged by the AMC, compare its performance with peers and ensure that AMC’s sponsor is not getting any undue advantage.
In addition to the core areas, the trustees should be responsible for periodically reviewing the steps taken by AMCs for the folios which do not contain all KYC attributes with bank details.
Further, Sebi has suggested that trustees and their resource persons should independently evaluate the extent of compliance by AMC and not merely rely on AMC’s assurances.
To facilitate trustees’ supervision, AMCs should provide them with analytical information.
Presently, the trustees primarily rely on the AMCs for ensuring compliance with the applicable rules.
Under the rules, trustees hold the property of the mutual fund in trust for the benefit of the unitholders. The trustees appoint an AMC to float schemes for the mutual fund and manage the funds mobilised under various schemes, in accordance with the investment objectives.
“In view of the increasing scale and reach of the mutual fund industry, trustees’ role in respect of unitholders’ protection assumes even greater significance,” Sebi said on Friday.
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Over the past decade there has been a five-fold increase in the size of the mutual fund industry. The assets under management (AUM) has surged from Rs 7.93 lakh crore in November 2012 to Rs 39.89 lakh crore in December 2022.
To ensure that trustees devote time and attention to their core responsibilities, Sebi has suggested that for fulfilling other responsibilities, trustees may rely on professional firms such as audit firms, legal firms, merchant bankers for carrying out due diligence on their behalf.
The Sebi also listed some duties trustees can delegate to AMCs. This include ensuring that all systems are in place prior to the launch of any scheme by the AMC, and calculating any income in the mutual fund due to the fund and any income received in the mutual fund for unitholders.
The regulator has proposed to provide a one year time to existing trustees with board of trustee structure to convert into a trustee company, from governance point of view.
Presently, two structures for trustees are permitted — corporate and board of trustees structure. Moreover, there are a few mutual funds which have the board of trustees structure while the trustees of all other mutual funds have adopted the structure of a trustee company.
Considering the enhanced role of trustees over the period of time, Sebi has suggested to increase the minimum number of trustees to adequately perform their functions. Presently, the minimum number of trustees prescribed is four.
Also, it has been proposed that the chairperson of the trustee company should be an independent director.
Sebi has suggested that apart from the meeting of the audit committee of AMCs and trustees (which mostly comprises of independent directors), the board of AMCs and the board of trustees may be mandated to meet at least once a year to discuss the issues concerning the mutual funds.
The regulator proposed that the existing MF Regulations on AMC and its obligations may be amended to include additional clauses with respect to the obligations of the board of AMC.
The proposed amendment may include a clause which casts an obligation on the board of AMC to ensure that all the activities of the asset management company are in accordance with the provisions of these regulations.
The Securities and Exchange Board of India (Sebi) has sought comments from public till February 24 on these proposals.