SEBI Chairperson says regulator won’t interfere in IPO offer-for-sale decisions

SEBI signals no appetite to regulate OFS in IPOs in its latest board meeting

Market participants have, in recent months, debated whether OFS-dominated IPOs dilute the capital-raising objective of public markets. However, SEBI Chairperson, Tuhin Kanta Pandey ruled out any move to regulate or cap the offer-for-sale (OFS) component in IPOs, saying the regulator does not believe in prescribing how capital formation should take place.

“We don’t want to prescribe one particular model of capital formation,” Pandey said, ruling out any near-term move to impose OFS-specific norms.

Pandey said capital markets are designed to serve multiple objectives, including fund-raising and providing exits to early investors. He pushed back against the view that a higher OFS component should automatically raise red flags.

“Capital formation happens at different stages of a company’s journey. Exits are also part of the process,” he said.

According to him, SEBI’s responsibility is limited to ensuring adequate disclosures, not to judging whether selling shareholders are exiting too early or too aggressively. “Our job is disclosure. We are not going to sit in judgment on whether somebody should exit or not,” he said.

The regulator follows a disclosure-based framework and would step in only in cases of serious misrepresentation or regulatory violations.

Pandey also clarified that SEBI does not judge the timing or motives of exits by early investors or promoters. “It is not for the regulator to decide whether somebody is exiting early or late,” he said, reiterating that investors should rely on available disclosures rather than assumptions about promoter intent.

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