Initial Public Offers (IPOs) norms are likely to be changed by the Securities and Exchange Board of India (SEBI) in order to allow smaller float for large issues, reports stated on Monday.
Sebi may discuss the new norms on February 17 along with several other issues such as the gold spot exchange, investor charter and strict norms to make independent directors accountable, MoneyControl reported. The proposed changes will help large companies like Life Insurance Corporation and tech-based entities.
Companies with post-issue valuation of Rs 10,000 crore to Rs 1 lakh crore are likely be required to dilute Rs 1,000 crore with an additional 5% of the value exceeding Rs 10,000 crore, as per the new norms. Currently, if the post-issue capitalisation is more than Rs 4,000 crore, the dilution requirement is 10%. For Rs 1,600 crore to Rs 4,000 crore, it is Rs 400 crore and for smaller IPOs it is 25%.
The requirement for a market value of over Rs 1 lakh crore would be 2.5% in addition to Rs 1,000 crore, making the issue more manageable than under the current norms that require a float of 10%. Under the new norms, companies with a valuation of more than Rs 1 lakh crore may also be given five years instead of three to comply with 25% minimum public shareholding norms.