Aiming to reduce market strain and protect investors, SEBI’s new proposals streamline mega IPO requirements.
The Securities and Exchange Board of India (SEBI) has introduced a set of proposals aimed at easing the process for companies launching mega IPOs while reducing strain on the market. The move is expected to benefit large firms seeking to raise over ₹100 billion in a single issue.
According to the proposals, companies with IPO sizes exceeding ₹100 billion will only be required to offload 5% of their post-issue paid-up capital through the offer, instead of the current 10%. This relaxation is designed to prevent large offerings from overwhelming market liquidity. Additionally, anchor investor allocation norms have been revised, with the lock-in period for 50% of allotted shares set at 90 days and the remaining 50% at 30 days.
Market experts believe these measures will strike a balance between investor protection and market stability. Archana Balasubramanian, Partner at Agama Law Associates, said the proposals would provide greater flexibility for issuers while safeguarding small investors from excessive supply and potential price volatility.
SEBI has also addressed concerns around quota distribution. The regulator recommended that high-demand IPOs should allocate more to non-institutional investors, ensuring a wider participation base. This could prevent large institutional players from dominating allocations.
The proposals come at a time when India is witnessing an increasing number of large IPOs, with companies like Life Insurance Corporation of India (LIC) and Paytm having raised significant amounts in recent years. Market participants expect the new framework to encourage more firms to tap the capital markets without destabilising investor sentiment.
