Securities and Exchange Board of India (SEBI) has proposed a discount within the fairness dilution requirement for preliminary public affords (IPOs) exceeding Rs 10,000 crore. Companies with a post-issue capital above Rs 10,000 crore will likely be required to initially promote solely 5 per cent to the general public, as towards 10 per cent mandated earlier, the market regulator stated in a session paper issued on Friday. The session paper will likely be open for public suggestions until December 7.
“It has been represented that such large issuers already have investments by PE / other strategic investors who are classified as public shareholders postlisting and therefore, mandating minimum 10 per cent of post issue MCap at the time of IPO leads to unnecessary dilution of holding of the promoter/ existing shareholder and is therefore a constraining factor for listing”, Sebi stated in its session paper.
SEBI has additionally proposed to extend the timeline for sustaining minimal public shareholding at 95 per cent from three years to five years for IPOs with greater than Rs 10,000 crore as post-issue capital.
“In case of very large issuers (with post-issue capital of Rs 1,00,000 crore and above), there is a possibility that they may find it difficult to comply with the minimum public shareholding of 25 per cent within 3 years of listing,” Sebi stated.
The securities market, together with the IPO market, is dynamic and must preserve tempo with evolving circumstances, Sebi maintained within the session paper.