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On September 12, the market regulator SEBI approved a plan to make it easier for large companies to raise funds through IPOs.
SEBI announced that companies with a market cap above ₹5 trillion ($56.65B) can now sell just 2.5% of their shares in an IPO, instead of the earlier 5%.
SEBI has eased IPO and shareholding rules for large companies. Firms with market cap above ₹5 lakh crore can now sell only 2.5% of shares in their IPO, instead of 5%, making it easier for the market to absorb big issues.
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Companies with ₹50,000 crore–₹1 lakh crore market cap will get 5 years (up from 3) to meet the 25% public shareholding rule, while those above ₹1 lakh crore will have up to 10 years.
"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.
"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.
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SEBI has reduced the minimum share-sale requirement for large IPOs and eased disclosure rules for small related-party transactions. It also approved single-window access for low-risk foreign investors to simplify compliance and attract more investment.
To make IPOs more appealing to global funds, SEBI will revamp the share-allocation framework for anchor investors.
Additionally, stock exchanges and other market infrastructure institutions must now appoint two executive directors to strengthen governance and oversight.
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