SEBI allows large firms to launch IPOs with smaller issue size

For companies that have a market cap between Rs 1 lakh crore and Rs 5 lakh crore, SEBI has called for a minimum public offer of up to Rs 6,250 crore or 2.75 percent of the post-issue market capitalisation.

Market regulator on September 12 approved a plan to simplify fundraising by large companies through an initial public offering.

The Securities and Exchange Board of India said companies can now sell a minimum of 2.5% of their paid-up share capital in their IPO from the current 5% if their market capitalisation is above Rs 5 lakh crore after the listing. This will make it easier for the market to absorb the sizeable offerings, SEBI said.

For companies with market cap between Rs 50,000 crore- Rs 1 lakh crore, the Minimum Public Shareholding (MPS) of 25% is to be achieved in 5 years as against current 3 years.

SEBI also relaxed the deadline for large companies to meet the 25% public float requirement to five years from three years.

Firms with a post-listing market cap exceeding Rs 1 lakh crore will be allowed up to 10 years to comply with the norm, it said.

"We are introducing four additional thresholds beyond the existing Rs 4,000 crore level: Rs 4,000 crore to Rs 50,000 crore, Rs 50,000 crore to Rs 1 lakh crore, Rs 1 lakh crore to Rs 5 lakh crore, and above Rs 5 lakh crore, and for companies with a post-issue market capitalization of more than Rs 5,500 crore but not exceeding Rs 1 lakh crore, it is proposed to revise the minimum public offer from the current requirement of 10% of the post-issue market capitalization to Rs 1,000 crore plus at least 8% of the post-issue market capitalization, thereby creating a scale-based threshold," said SEBI chairman Tuhin Kanta Pandey at a post-board meeting press conference in Mumbai.

"For companies with a post-issue market capitalization of Rs 1 lakh crore and above, the minimum public offer (MPO) is proposed to be Rs 6,250 crore plus at least 2.75% of the post-issue market cap, and for those with a market cap of above Rs 5 lakh crore, the requirement will be Rs 15,000 crore plus 1% of the post-issue market cap," added Pandey.

The SEBI board also reduced the proportion of shares large companies looking to list must sell and announced simpler disclosures for low-value transactions between interconnected entities, or "related parties".

In its board meeting, SEBI approved a proposal to make it easier for low-risk foreign investors to participate in the Indian securities market with the introduction of a single window access. This is aimed at simplifying compliance and enhancing the country's attractiveness as an investment destination.

To enhance the attractiveness of IPOs for global funds, SEBI decided to revamp share-allocation framework for anchor investors in companies' maiden public offerings.

Additionally, it has been decided to overhaul the governance framework of market infrastructure institutions including stock exchanges by mandating the appointment of two executive directors (EDs) to bolster operational oversight.

Other decisions taken by Sebi board:

*Sebi to re-classify Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) as equity instruments

*Sebi to broaden the definition of 'strategic investor' under the REIT and InvIT norms by including QIBs

*Sebi to overhaul governance framework of stock exchanges by mandating the appointment of two executive directors

*Sebi board clears lighter regulatory framework for AIFs with accredited investors

*Sebi decides to revamp share-allocation framework for anchor investors in IPOs to broaden institutional investors' participation

*Sebi board eases IPO rules for very large firms; extends timelines up to 10-years to meet minimum public shareholding requirements