For companies caught between weak market sentiments and funding needs, the option to sharply cut IPO size, in some cases by as much as half, could offer a middle path, with industry participants expecting issuers to use the flexibility selectively depending on their comfort with lowering the raise.
Deal Support
The markets regulator may allow companies going public to cut their issue sizes by as much as 50 per cent without much paperwork amid the weak investor sentiment and geopolitical uncertainties. Market participants said the relaxation is unlikely to be exercised uniformly but could help unlock deals that are otherwise at risk of being deferred.
“The recent regulatory flexibility is optional in nature and will be exercised only by those promoters who are comfortable recalibrating their fundraise,” said Narinder Wadhwa, Managing Director and CEO of SKI Capital Services.
While a reduced issue may not fully meet original fundraising plans, it can still address immediate funding requirements. Wadhwa said companies may still be able to “tap the market, secure essential funding, and avoid indefinite delays,” even if the raise is smaller than initially envisaged.
“There are several companies keen to list, and what’s been holding them back is really the size of their originally planned IPO and exit expectations of selling shareholders,” said Manan Lahoty, Partner at Cyril Amarchand Mangaldas. “For these issuers, a smaller raise is clearly preferable to deferring the listing altogether.”
Capex focus
Companies may prioritise essential capital expenditure, debt repayment, and near-term needs while deferring less critical expansion. At the same time, regulatory safeguards are expected to ensure that the core objectives of the issue are not diluted, with any reduction largely coming from secondary components or discretionary allocations.
“The relaxation is case-specific, time-bound, and conditioned on regulatory approval, public disclosure, and certification by lead managers that compliance remains intact. That suggests the bar for readiness remains high,” Rohit Jain, Managing Partner at Singhania & Co, said.
By aligning supply more closely with demand, issuers may see improved subscription dynamics. Wadhwa said that such calibration could support “better price discovery” and lower the risk of weak listing performance.
“If issuers can right-size their offerings while still meeting investor expectations on liquidity, these IPOs should find takers. Smaller, well-priced issues are often easier to place in a cautious market, and that typically leads to healthier demand discovery,” Lahoty said.
Institutional investors are expected to remain selective, while retail interest could be supported by more reasonably sized and priced offerings.