Sebi extends IPO-size flexibility on the back of soaring primary market activity

Listen to this article in summarized format

The earlier relaxation was available for draft papers filed until September 2026. Sebi first allowed the 50% resizing flexibility in April this year, against an earlier deadline of September 30, as market volatility made IPO sizing more difficult for issuers and bankers.

The move comes after a sharp pick-up in fundraising this financial year, where mainboard IPOs raised Rs 90,482 crore in the July-September quarter, while SME IPOs raised another Rs 4,167 crore. Together, companies raised Rs 94,649 crore through 161 IPOs during the quarter, bringing the tally close to Rs 1 lakh crore.

September was the busiest month in the period, with 34 mainboard IPOs raising Rs 39,381 crore and 52 SME issues raising Rs 2,123 crore. In July, 12 mainboard IPOs raised Rs 28,648 crore and 17 SME issues raised Rs 891 crore. August saw 23 mainboard issues raising Rs 22,453 crore and 23 SME IPOs raising Rs 1,153 crore.

AIBI said the relaxation has helped more companies launch IPOs by reducing procedural friction when market conditions or business requirements change after filing draft papers.

Under the revised framework, the lead manager can file an updated offer document reflecting the revised issue size, as long as there is no change in the main object of the issue. The lead manager must also ensure compliance with Sebi regulations, update all relevant sections of the draft document and make an addendum public. Merchant bankers will have to carry out adequate due diligence and justify the revision.

The relaxation allows companies to be flexible with capital raising plans. In a volatile market, forcing issuers to file a fresh DRHP for a large revision can delay launches, increase costs and create timing risk.

AIBI said it had made representations to Sebi on practical challenges faced by issuers and merchant bankers while revising fresh issue sizes during the IPO process. The industry body said the latest extension will improve operational efficiency while preserving disclosure standards and investor protection.

Mahavir Lunawat, chairman of AIBI, said IPO sizes may need revision because of changing business needs and market conditions. "Sebi relaxation reduces procedural hurdles and makes the IPO process more efficient. AIBI welcomes the regulator's move to provide greater flexibility to issuers and merchant bankers. This is a balanced step that facilitates capital raising while safeguarding transparency, due diligence and investor protection," Lunawat said.

Disclosure: This article has been written by Podishetti Akash, who is not a SEBI-registered Research Analyst or an Investment Adviser. Podishetti Akash and his ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclosures here.