Sebi Mulls Relaxing Minimal Public Offer size for large COS; To trim the retail quota in IPO

Markets Regulator Sebi On Monday suggested relaxing the minimum public offer requirements for very large companies and to extend the timeline for them to meet minimum standards for public shareholders.

In addition, the supervisor has proposed reducing the costumes in IPO allocations from 35 percent to 25 percent for IPOs of more than RS 5,000 Crore, given the challenges that emitents are confronted in performing major problems.

According to the advisory book, the proposed framework would, if implemented, reduce the immediate dilution burden and still ensure the gradual compliance with standards for public shareholders.

It is expected that it will help big problems, which often find a challenge to dilute substantial interests via an IPO, because the market may not be able to absorb such large stock of shares, Sebi said in her consultation paper.

The proposal can encourage large issues to pursue lists in India.

Currently, such emptents are obliged to offer a higher percentage of their shareholding to the public, which often results in massive IPO sizes that are difficult to absorb. According to the proposed rules, large companies may increase a lower percentage of shares instead of sticking to a fixed high percentage. For companies with a market capitalization between RS 50,000 Crore and RS 1 Lakh Crore, the new minimum public offer (MPO) RS will be 1,000 crore and at least 8 percent of the capital after the publication, with minimum public shareholding (MPS) of 25 percent can be reached within 5 years. For issuers with a market capitalization between RS 1 Lakh Crore and RS 5 Lakh Crore, the MPO RS will be 6,250 crore and at least 2.75 percent of the capital after the publication. In such cases, if the public shareholders are lower than 15 percent at the time of mention, this must be increased to 15 percent and 25 percent within 10 years within 10 years; However, if it is already 15 percent or more when mentioning, 25 percent must be reached within 5 years.

For companies with market capitalization above RS 5 Lakh Crore, the proposed MPO RS will be 15,000 crore and at least 1 percent of the capital after the publication, subject to a minimum dilution of 2.5 percent. In these cases, if the public shareholding is less than 15 percent in mention, this must reach 15 percent within 5 years and 25 percent within 10 years, while emitting people with at least 15 percent public shareholdership on the list have to reach 25 percent within 5 years.

This means that companies can first mention with smaller IPOs, while gradually increasing their public shareholders for a longer period, reducing the immediate burden of large-scale equity dilution.

Small companies with a market capitalization of up to RS 1,600 Crore must currently mention with 25 percent public shareholding at the time of IPO.

For medium-sized companies with a market capitalization between RS 1,600 CRORE and RS 1.00,000 crore, a lower MPO of 10-25 percent is permitted, with a timeline of 3-5 years to reach 25 percent minimum public shareholding.

In the case of very large companies with market capitalization above RS 1.00,000 crore, the required MPO of RS is 5,000 crore or at least 5 percent, with the government share being increased to 10 percent within 5 years to 10 percent.

The Securities and Exchange Board of India (Sebi) searched for public comments about the proposals until 8 September.