Market Regulator, SEBI is gearing up to modify Initial Public Offering (IPO) norms in India making them less arduous for legitimate sellers while putting down on the possible misuse.
The revamp includes the inclusion of a broader set of institutional investors such as alternative investment funds (AIF’s) for counting promoter’s contribution in startups, reducing disclosure price for two days before the issue opens and reducing requirement period for disclosure to three years than five.
The panel board is scheduled to meet on June 21 to discuss proposed modifications in ICDR. Prithvi Haldea, Head of the ICDR Committee conducted by SEBI last year said,
There are cases of good companies where the promoter capital is not adequate for lock-in in an IPO. Sometimes, alternative investment funds are willing to subscribe to the shortfall in the capital and prepared for a lock-in. Hence, it’s important to recognize a wider set of institutional investors to contribute towards promoters’ contribution.
- In an attempt to reduce the effect of market volatility, the committee wants the price band to be announced two working days before the issue.
- In addition, it has also proposed restriction in the subscription of high net worth individuals (HNI’s) to the maximum non-qualified institutional buyer portion.
- SEBI wants to rationalize disclosures for group companies.
The Indian market has witnessed several changes in recent years not only at the regulatory front but also in structure and size of the capital market. And now, with SEBI taking a big leap in making IPO easy for bonafide issuers while clamping down egregious transactions seems to a right step in good direction.