SEBI allows more leeway to companies to float IPOs, revise issue size
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India’s capital markets regulator on Tuesday allowed certain relaxations to companies looking to tap into capital markets, including extending the time for companies looking to go public via an initial public offering (IPO).

The Securities and Exchange Board of India (SEBI) also reduced the minimum subscription levels and allowed higher-than-stipulated revisions in issue size.

Acknowledging the impact of the coronavirus pandemic on capital markets activity, SEBI said it introduced these temporary relaxations after receiving a number of suggestions and representations from various industry bodies.

SEBI said that companies whose IPO approvals were valid between March 1 and September 30 have been granted a six-month extension from the date of expiry of regulatory clearance provided they meet all compliance requirements. SEBI’s IPO approvals are normally valid for one year. 

The regulator has also allowed companies floating IPOs to tweak their issue size by up to 50%. Such companies will not be required to file fresh draft documents with SEBI if there are no material changes to the use of proceeds.

As per existing SEBI regulations, companies were required to file fresh documents if their issue size either increased or decreased by 20% of their estimated issue size at the time of filing their draft red herring prospectus.

These relaxations are also applicable to companies raising equity via a rights issue and follow-on offerings openings before December 21 this year.

The changes come into force with immediate effect, SEBI said.

According to SEBI website, three companies — ESAF Small Finance Bank, Appejay Surendra Park Hotels, and PE-backed NCDEX — had received IPO approval after March 1.

Besides, nearly 20 companies are in queue — either with valid approval or waiting for SEBI’s nod — for an IPO.

SEBI also allowed certain relaxations for companies equity via a rights issue. The minimum subscription level is revised to 75% compared with the actual requirement of 90% bids for shares in a rights issue besides introducing relaxations on timelines and the quantum of fundraising.

These changes also come into force with immediate effect and will apply to rights issues opening on or before March 31 next year.

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