Indian companies can now revise IPO size till March 2027
What's the story
The Securities and Exchange Board of India (SEBI) has extended its relaxation policy for revising the size of initial public offerings (IPOs) until March 31, 2027, as per Moneycontrol. The move comes in light of market volatility that can affect investor appetite and the capital, companies want to raise through public issues. Under this relaxation, firms can increase or decrease their fresh issue size by up to 50%, subject to certain conditions.
Policy details
Relaxation introduced in response to market volatility
The relaxation policy was first introduced by SEBI in early April, as tensions in West Asia impacted investor sentiment.
Under the previous framework, any changes exceeding 20% in issue size would have required companies to file fresh draft offer documents.
This relaxation was brought in to help firms adapt to changing market conditions without restarting the regulatory filing process.
Compliance requirements
Conditions for issuers and BRLMs
Companies looking to take advantage of this relaxation must ensure that the main objective of their IPO remains unchanged.
They also have to justify why they are revising the issue size.
Book-running lead managers (BRLMs) will have to certify compliance with applicable regulatory requirements.
The lead BRLM will be responsible for updating the draft red herring prospectus (DRHP) to reflect the revised issue size, with any changes disclosed through an addendum to the offer document.
Scope of policy
Applicability and limitations of the relaxation
It's important to note that SEBI's relaxation policy is applicable only to the fresh issue component of an IPO. This is where companies issue new shares to raise capital.
The policy doesn't allow firms to make unrestricted changes or alter the fundamental objective of their proposed offerings.
This way, it provides issuers with flexibility while maintaining transparency for investors and ensuring that any changes made are adequately explained.