Sebi and investment bankers discuss revising IPO issue size norms
The Association of Investment Bankers of India has proposed increasing the threshold for changing issue sizes to 50 per cent.
The Securities and Exchange Board of India (Sebi) and the Association of Investment Bankers of India (AIBI) are discussing changes to fundraising rules, according to a report by Mint. The discussions involve making it easier for companies to adjust the size of their initial public offerings (IPOs).
Currently, a company must file a new draft red herring prospectus (DRHP) if its issue size changes by more than 20 per cent. The AIBI has requested that this limit be raised to 50 per cent to match the existing threshold for offers for sale (OFS).
One person familiar with the matter said the AIBI made a representation to the regulator to change the 20 per cent limit for fresh fund raises. They noted that the matter was discussed with Sebi approximately 15 to 20 days ago, but no final decision has been reached.
The proposal aims to reduce the regulatory burden on companies. Currently, significant changes in issue size can require a new round of documentation and scrutiny. Pranav Haldea, managing director at Prime Database, said that requiring a fresh DRHP can involve high costs and time, which might force companies to delay their offerings.
Sebi has previously provided a temporary relaxation of the threshold to 50 per cent, which has been extended until March 2027. This temporary measure requires that the main object of the issue remains unchanged and that lead managers certify compliance with regulations.
Queries sent to Sebi and AIBI regarding the discussions did not receive responses at the time of publication.