Mega IPOs May See Lower Share Dilution

The Securities and Exchange Board of India (Sebi) on Monday proposed lowering the minimum dilution requirement for mega initial public offerings (IPOs), a move expected to benefit large listings such as Reliance Jio Infocomm and the National Stock Exchange (NSE).

- KHUSHBOO TIWARI

Under the proposed norms, companies with a market capitalization exceeding ₹5 trillion would be allowed to significantly reduce their minimum public offer (MPO). For instance, under the current framework, a company with a market valuation of ₹15 trillion must come out with an MPO worth ₹80,000 crore. This has been proposed to be reduced to ₹37,500 crore.

Such large companies would also be given up to 10 years to achieve the 25 per cent minimum public shareholding (MPS) requirement, compared with five years at present.

These proposals have been recommended to the Ministry of Finance for amendments to the Securities Contracts (Regulation) Rules (SCRR).

The larger the company, the greater the benefit in terms of reduced MPO.