Sebi relaxes IPO dilution rules to help big listings

Easier onboarding of FPIs gets regulator nod

- KHUSHBOO TIWARI

To encourage the listing of large companies, the Securities and Exchange Board of India (Sebi) on Friday approved lowering the minimum dilution requirement for initial public offerings (IPOs) and extended timelines for achieving the minimum public shareholding (MPS).

The regulator also approved changes to the anchor investor framework, permitting life insurers and pension funds in the reserved category for anchor allocation alongside domestic mutual funds.

At a time when Sebi is receiving over 100 applications a month for foreign portfolio investor (FPI) registrations, it also announced a single window for onboarding certain FPIs, aimed at reducing compliance burden. Lower minimum public offers (MPOs) or dilutions will further ease requirements.

Sebi said large stake dilutions via IPOs may pose challenges, as the market may not be able to absorb such a large supply of shares, which could discourage issuers from pursuing listings in India.

Companies with a post-issue market capitalisation (mcap) of above ₹5 trillion will need to offer shares worth ₹15,000 crore and at least 1 per cent of mcap, with a minimum dilution of 2.5 per cent prescribed.