Sebi plans easier IPO norms for big firms

MUMBAI : The markets regulator is seeking to make it easier for India’s largest firms to go public. Sebi has proposed easing minimum public offer (MPO) norms and extending timelines for meeting minimum public shareholding (MPS) requirements. The proposals have been submitted to the govt for amending the Securities Contracts (Regulations) Rules.

Currently, firms with a post-issue market value above Rs 1 lakh crore must sell at least 10% of equity. Sebi wants to replace this single threshold with a three-tier system. Companies valued between Rs 50,000 crore and Rs 1 lakh crore would need to float at least 8% of shares, with a floor of Rs 1,000 crore. Those between Rs 1 lakh crore and Rs 5 lakh crore would dilute 2.75%, or at least Rs 6,250 crore. For the very largest, worth over Rs 5 lakh crore, the minimum would drop to 2.5%, or Rs 15,000 crore.

The regulator also wants to provide more time to reach the 25% MPS threshold. Firms in the Rs 50,000–1,00,000 crore range would get five years instead of three.

Those above Rs 1 lakh crore would have tiered timelines: up to ten years if they list with less than 15% public shareholding, and five years if they start above that level. Sebi has suggested that the extended timelines should also apply to listed firms yet to achieve 25% public shareholding, whether still within their permitted period or already non-compliant.

Sebi’s rationale is that large flotations are difficult to absorb in one go. Forcing companies to sell too much too quickly risks depressing valuations. The regulator noted that IPO sizes are rising but that recent mega-listings, including Life Insurance Corporation of India and Hyundai Motor India, show that smaller floats still provide adequate liquidity.
Both issuers have shareholder bases and trading turnover similar to Nifty 100 firms.

In a shift from earlier proposals, Sebi has decided to retain the 35% retail quota for all IPOs, including jumbo issues. It argued that lowering the MPO requirements would make large public issues more manageable, removing the need to reduce the retail share portion.