SEBI Board Meeting Today:IPO Norms Revision To Foreign Investment Regulations Tweak, What To Expect?

A range of issues and topics are under lens by the officials in the ongoing Securities and Exchange Board of India (SEBI) board meeting on Friday. Key discussions are reportedly focused on IPO norms for large firms, regulations for foreign and alternative investors, and adjustments in market infrastructure. These reforms aim to streamline processes and enhance participation in the Indian financial markets.

SEBI is contemplating easing IPO norms for firms with significant market capitalisation. Companies valued between Rs 50,000 crore and Rs 1 lakh crore may be required to have a minimum public offer (MPO) of Rs 1,000 crore and at least 8% of post-issue capital. They will have five years to achieve a minimum public shareholding (MPS) of 25%, extending the current three-year timeframe.

Revised IPO Norms for Large Firms

For companies with a market value ranging from Rs 1 lakh crore to Rs 5 lakh crore, SEBI might introduce new norms mandating an MPO of Rs 6,250 crore with at least 2.75% of post-issue capital. These firms could have up to ten years to meet MPS targets based on their shareholding levels. This approach allows gradual public shareholding increases while reducing immediate equity dilution burdens.

Companies exceeding Rs 5 lakh crore in market capitalisation may face a minimum IPO size requirement of Rs 15,000 crore with at least 1% of post-issue capital. These issuers must dilute at least 2.5% of their stake. This strategy enables listing with smaller IPOs while incrementally boosting public shareholding.

Single-Window System for Foreign Investors

The board is also considering a proposal for a single-window system aimed at low-risk foreign investors. The framework, known as SWAGAT-FI (Single Window Automatic & Generalised Access for Trusted Foreign Investors), seeks to simplify investment processes in Indian markets by allowing unified registration across various investment routes and minimising compliance requirements.

Identified low-risk investors include sovereign wealth funds, central banks, multilateral institutions, highly regulated public retail funds, insurance companies, and pension funds. If approved, SWAGAT-FI could significantly ease investment procedures for these entities.

Changes in Alternative Investment Funds

Apart from IPO and FPI rules, SEBI's board is expected to discuss modifications to rules concerning accredited investors in specific alternative investment funds (AIFs). Additionally, they may consider expanding rating agencies' activities and granting equity status to Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).

Several proposals have already been presented for public consultation as part of SEBI's broader initiative to refine India's regulatory landscape. This meeting marks the third under SEBI Chairperson Tuhin Kanta Pandey since assuming office on March 1 this year.

The proposed reforms reflect SEBI's commitment to enhancing the efficiency and accessibility of India's financial markets. By addressing key areas such as IPO norms and foreign investor frameworks, these changes aim to foster greater participation and streamline regulatory processes.