Sebi extends relief on IPO size tweaks until March 2027
The Securities and Exchange Board of India (Sebi) has extended its relief to initial public offering (IPO) issuers, allowing them to change their issue size without additional compliance until March 2027, according to two people aware of the development and a document seen by Mint.
In April, the capital markets regulator allowed companies to increase or decrease their issue size by up to 50% without triggering additional regulatory compliance requirements. The window was available for companies opening their public issues before 30 September.
“It has been decided to permit issuer companies to increase or decrease the size of their fresh issues up to 50% without the requirement to file a fresh draft offer document with Sebi. The above relaxation on change in fresh issue size shall be applicable for issues (IPO) opening on or before 31 March 2027,” said Sebi in a letter to the Association of Investment Bankers of India (AIBI) on 12 October.
The AIBI said in a statement that the decision followed its representations to Sebi, highlighting the practical challenges faced by issuers and merchant bankers when revising the size of fresh issues during the IPO process.
"The relaxation is expected to provide greater flexibility in responding to evolving business requirements and market conditions, while reducing procedural hurdles and improving operational efficiency in the capital-raising process,” the statement said.
Guardrails
The relaxation comes with guardrails: the main object of the issue must remain unchanged, and lead managers must certify compliance with Sebi regulations. The regulator has placed the responsibility for ensuring compliance on the lead manager responsible for the issue.
IPOs with valid Sebi approvals originally expected to have launched before April 2027 include Oyo parent Oravel Stays Ltd, fintech major PhonePe Ltd, Carlsberg India Ltd, Avaada Electro Ltd, Paras Healthcare Ltd, among others
Under current Sebi rules, if the issue size in a fresh issue is changed by more than 20%, the company is mandated to file fresh draft offer documents. That threshold changes to 50% in an offer for sale (OFS).
An IPO issues new shares to raise capital for a company, whereas an OFS allows existing shareholders, such as promoters or early investors, to sell their shares directly to the public without creating new equity.
“The AIBI had made a representation to Sebi on this. The ask had also come in individually from several investment bankers, as markets remain volatile. The relief was needed to ensure that IPO issuances are not forced into a market that may not be prepared for them,” said one of the two people cited above.
Sebi did not immediately respond to Mint’s emailed queries.
Previously, Sebi had extended the validity of IPO approvals for companies planning to go public. Observation letters expiring between 1 April and 30 September 2026 will now remain valid until 30 September, Sebi said in a circular issued on 7 April, giving companies a longer runway to list.
So far this year, the Indian stock markets have seen 102 mainboard IPOs and 183 SME IPOs, according to research platform Chittorgarh.
“The extension provides welcome flexibility to issuers navigating evolving market conditions. It allows companies to recalibrate their issue size in line with investor demand, valuation expectations and funding requirements, while retaining the ability to access public markets. This pragmatic step can help issuers and investors arrive at a more balanced outcome and support a healthier IPO ecosystem,” said Prakash Bulusu, joint chief executive at IIFL Capital.