Mumbai: The Securities and Exchange Board of India (SEBI) on Thursday announced a slew of reform measures related to initial public offer (IPO) and offer for sale (OFS) to revive the primary market.
In a major initiative, which would encourage more mid sized companies to tap the primary market, the regulator relaxed the minimum dilution criteria during the initial share sale.
According to the new norms, companies can sell a minimum stake of 25 per cent or Rs 400 crore, whichever is lower.
Earlier, companies with less than Rs 4,000 crore market capitalisation were required to dilute a minimum of 25 per cent promoter holding.
“This will remove the anomaly that a company just short of Rs 4,000 crore market capitalisation, was required to dilute about Rs 1,000 crore while another company at Rs 4,000 crore market capitalisation was required to dilute only Rs 4,00 crore,” chairman U.K.Sinha said after SEBI’s board meeting.
“The number of IPO’s will increase while their ticket size will come down,” said Jagannadham Thunuguntla, head of research, SMC Global Securities.
