SEBI New Rules : EBI Just Rolled Out the Red Carpet for India's Biggest Companies to Go Public

The Securities and Exchange Board of India (SEBI) has just made a significant move that could pave the way for some of India's largest companies to go public. In a recent board meeting, the market regulator approved changes that allow large companies to launch their Initial Public Offerings (IPOs) with a smaller initial issue size This is a major shift from the previous regulations and is aimed at making it more attractive for mega-firms to list on Indian stock exchanges.Previously, there was a concern that the market might not have the capacity to absorb the massive share sales required for very large companies to go public. This pressure to dilute a substantial stake at once was seen as a deterrent for some big players considering a domestic listing.Under the newly approved framework, the requirements for the minimum public offer and the timeline to achieve minimum public shareholding have been relaxed, especially for companies with a very large market capitalizationThis means these companies can now list with a smaller initial public offering and gradually increase the public's shareholding over a longer period.Here's a simplified look at the new tiered structure for the minimum public offer (MPO):For companies valued between₹50,000 crore and₹1 lakh crore: They will need to make a minimum public offer of at least₹1,000 crore and 8% of the post-issue capitalThey will now have five years, instead of the previous three, to meet the 25% minimum public shareholding requirementFor companies valued between₹1 lakh crore and₹5 lakh crore: The requirement could be an MPO of₹6,250 crore and at least 2.75% of the post-issue capital.For the giants valued over₹5 lakh crore: The minimum IPO size is set at₹15,000 crore with at least 1% of the post-issue capital, and they must dilute at least a 2.5% stake.For these mega-companies, the timeline to reach the 25% public shareholding could be extended up to ten years.This strategic move by SEBI is expected to encourage more large Indian companies to list locally rather than seeking overseas markets. By easing the immediate dilution pressure, the regulator aims to create a more favorable environment for these corporate giants to enter the Indian stock market, which could have a significant positive impact on the market's depth and overall economy.