Sebi Uses AI to Speed Up IPO Approvals

Mumbai, Jan 19 (PTI) Markets regulator Sebi will be using a generative AI tool, which has been developed in-house, to clear IPO applications on time, as it has been found to be effective in cutting the time lag massively.

"One of our junior officers in the tech team has just developed a generative AI tool that can check the various compliances in the LODR (listing obligations and disclosure requirements) in no time.

"So, we want to deploy this and within the next few months, hopefully as much as 80 per cent of the LODR compliance checks in DRHPs, which are done manually now, will be automated using this tool," its chairperson Madhabi Puri Buch said here on Friday while addressing an event organised by investment bankers lobby AIBI.

She said the in-house tool, developed by junior officer Manoj, can do the verification checks in about two weeks.

The Sebi chief said this will go a long way in taking care of the ageing of public issues like IPOs.

She noted that the regulator, over the past few years, has massively improved on its application clearing, as it feels that any regulatory delay is very detrimental to the issuer and the regulator has no reason to delay public issue/market action by a company as timing is the most critical factor in any market activity.

Reeling out numbers, Buch said between March 31, 2022, and December 31, 2023, the ageing of public issues has been greatly resolved, with the number of public issues pending Sebi approval for less than one month falling from 14 in March 2022 to 10 in December 2023.

The number of applications pending for one to three months was 16 and 17, respectively.

The number of issues delayed by 3-6 months stood at 11 in March 2022 but steeply declined to 5 in December 2023, and during this same period, those delayed by over six months were 8 and 4, respectively.

None of the delays of six months was our making, but due to court issues, where we had no role except to wait for the judicial resolution, she added.

Meanwhile, addressing the same event, Sebi whole-time member Anath Narayan said the regulator is worried about the many issues in the valuation methods adopted by alternative investment funds for private capital and sought investment bankers' help for resolving the same.

"Like our counterparts elsewhere, we are also worried about the valuation methods of private capital being adopted by AIFs as the present method reeks of a serious conflict of interest as all the LPs and managers and partners have their skin deep into the business they propose to infuse capital," Narayan said.