India tweaks IPO rules to allow easier listing for big firms

[MUMBAI] India’s securities market regulator on Friday (Sep 12) made it easier for very large private companies to go public in one of the world’s top destinations for first-time share sales this year.

Companies with market capitalisation of more than five trillion rupees (S$72.9 billion) can now make an initial public offering (IPO) of as low as 150 billion rupees and dilute 2.5 per cent equity stake, the Securities and Exchange Board of India (Sebi) said in a statement following its board meeting.

Such companies will be allowed five years to raise the minimum public shareholding to 15 per cent and to 25 per cent in the next five years, according to the Sebi statement. Till now, IPO-bound large companies were required to dilute a minimum of 5 per cent of their equity and have 10 per cent public shareholding within two years of getting listed.

The new rule, proposed in a discussion paper last month, will allow large private companies such as Reliance Industries’s telecom unit Reliance Jio Infocomm and the country’s top bourse National Stock Exchange of India to offer a smaller slice in their proposed IPOs next year. Jio could fetch more than US$3 billion through its share sale under the new measure, Citigroup had estimated prior to Friday’s SEBI board meeting.

The regulator said that it will recommend changes to minimum offer size for IPOs to the Ministry of Finance for amending the existing regulations.

The relaxed listing rules will likely supercharge first-time share sales in the third busiest destination in the world this year. Companies have raised more than US$10 billion through IPOs in the South Asian nation in 2025, according to data compiled by Bloomberg.

The regulator also relaxed rules for marquee global investors looking to enter the country’s stock and bond markets. 

Sovereign wealth funds, central banks, global mutual funds among others will enjoy a so-called single window access intended to unify and streamline market access for “low-risk” global investors, SEBI said in the statement. The measure seeks to reduce regulatory complexities and enhance India’s global competitiveness as an investor friendly destination, it said. 

The move will encourage larger and more stable inflows from institutional investors and boost liquidity in both equity and debt markets, the regulator had said in a discussion paper last month. 

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Global institutional investors have for long complained to Indian regulators about complex compliance rules that hindered their participation in the country’s public markets. Sebi this week eased rules for foreign investors investing only in sovereign bonds in a bid to address access concerns.

Registration of foreign portfolio investors has surged in the past year, with about 12,000 accounts presently from 10,500 a year ago, Sebi board member Ananth Narayan told reporters in Mumbai after Friday’s meeting. The regulator is getting 100 applications per month, a much higher pace than a year ago, he said. BLOOMBERG