The Securities and Exchange Board of India (SEBI) proposed a cutback in the size of large initial public offerings (IPOs), which is expected to help large conglomerates to comply with share sale rules. The Sebi has proposed that companies with post listing capital of over Rs 10,000 crore will be required to only sell 5 percent of the company to the public, keeping promoter shareholding at 95 percent for a fixed period.
Currently, companies with over Rs 4,000 crore post-issue market capital are required to offer at least 10 percent to the public and subsequently bring down their promoter holding to 75 percent over a period of time. "It has been represented that such large issuers already have investments by private equity and other strategic investors who are classified as public shareholders post-listing and therefore, mandating minimum 10 percent of post-issue MCap at the time of IPO leads to unnecessary dilution of holding of the promoter or existing shareholder and is, therefore, a constraining factor for listing," SEBI said in its paper.
"Market participants have provided feedback that the compliance with the minimum offer to public requirement i.e. at least 10 percent of the post issue paid-up capital calculated at offer price is burdensome for large issuers," it added.
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