SEBI, India's capital markets regulator, has proposed easing listing norms for very large companies in order to reduce the immediate burden of public shareholding while ensuring gradual compliance. The move could change the way big-ticket IPOs are structured and timed.
Key Highlights
- SEBI proposes lowering minimum public offers to 2.5% for mega firms, easing listing entry requirements.
- Extended timelines: big issuers now get up to 5–10 years to meet 25% public shareholding.
If adopted, the proposed framework would allow large issuers to gradually dilute their stakes, reducing market pressure while maintaining retail participation. SEBI plans to maintain the 35% retail quota for IPOs over ₹5,000 crore, reversing its earlier proposal to reduce it.
SEBI noted that large issuers frequently face difficulties in offloading significant stakes through IPOs, which can overwhelm the market. The revised approach enables them to begin with smaller offerings while meeting the 25% minimum public shareholding (MPS) requirement over a longer time frame.
Under the draft rules
- Companies with a market capitalization between ₹50,000 crore and ₹1 lakh crore must offer at least ₹1,000 crore and 8% of post-issue capital, with a five-year timeframe to reach 25% MPS.
- For companies valued between ₹1 lakh crore and ₹5 lakh crore, the minimum public offer (MPO) is ₹6,250 crore and 2.75% of post-issue capital. If the initial public holding is less than 15%, the 25% threshold must be met in ten years; otherwise, in five.
- Entities exceeding ₹5 lakh crore must offer ₹15,000 crore and at least 1% of post-issue capital, with a minimum 2.5% dilution. The same staggered timeline applies based on the initial public shareholding.
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SEBI believes that the phased approach will avoid excess supply, which could pressure stock prices despite strong fundamentals. This move is also intended to encourage mega listings on domestic exchanges, following high-profile IPOs such as LIC and Hyundai Motor India.
In FY25, the average IPO size was ₹2,057 crore, up from ₹1,488 crore in FY20. Companies with market capitalization up to ₹1,600 crore must offer 25% public shareholding at listing, while mid-sized firms can comply in 3-5 years.
SEBI is accepting public feedback on the proposals through September 8.
