Highlights
- IPO size can be changed by up to 50% without refiling, email from regulator shows
- Market participants have had trouble marshalling IPO resources, email says
- Rule change valid until September 30, email shows
India’s markets regulator, Securities and Exchange Board of India (SEBI), will allow companies to cut the size of IPOs by as much as 50% without filing additional onerous paperwork as the Iran war has made it hard to follow through with initial plans, according to an email seen by Reuters.
Current rules stipulate that initial public offering documents need to be refiled if the planned fund-raising amount increases or decreases by 20% or more.
Firms will now only have to submit their revised offer size to SEBI for approval and these reviews will be fast-tracked, the regulator said in an email sent to the Association of Investment Bankers of India.
The relief will apply to issuers planning to raise fresh funds before September 30 and will only be granted if there is no change in the main object of the issue, the email said.
“By end of September, the Middle East crisis will either be resolved or companies will be in a position to better plan their fund raises,” said a source with direct knowledge of the matter, who was not authorised to speak to media and declined to be identified.
The change in rules is being reported by Reuters for the first time.
SEBI did not immediately respond to a request for comment.
It said in the email that rules were being eased as market participants were facing issues in mobilising resources and accessing capital markets due to tensions in the Middle East.
“Some issuers after this regulatory dispensation may proceed with a considerably reduced offer-for-sale component, prioritising the listing itself over maximising immediate secondary exits,” said Manan Lahoty, partner and head of capital markets at law firm Cyril Amarchand Mangaldas.
Last week, SEBI allowed companies whose deadlines for an IPO are due to lapse between April 1 and September 30 to have until September 30 to complete them.
It also said companies would not be penalised if they could not meet the requirement of having 25% of their stock held by public shareholders.
As of April 2, SEBI had given its approval for 143 companies to raise a combined 1.745 trillion Indian rupees.