On Thursday the markets regulator also relaxed the threshold trigger for open offer should be from the existing 25% to 49% for startups barring situations where there is any change in control directly or indirectly over the target company which will trigger open offer
The Securities and Exchange Board of India ( Sebi) , on Thursday, relaxed the listing norms for startups in India in an effort to facilitate easier access for startups looking to raise public funding from equity markets. Approving a number of changes to the framework for listing on the Innovators Growth Platform, SEBI said that it has decided to reduce the period of holding of 25% of pre-issue capital of the issuer company by eligible investors to one year from the current requirement of two years, while also allowing start ups to allocate up to 60% of the issue size on a discretionary basis, prior to issue opening for subscription to eligible investors with a lock in of 30 days on such shares. Currently, the issuer company is not permitted to make discretionary allotment.
On Thursday the markets regulator also relaxed the threshold trigger for open offer should be from the existing 25% to 49% for startups barring situations where there is any change in control directly or indirectly over the target company which will trigger open offer, irrespective of acquisition or holding of shares or voting rights in a target company.
Additionally, SEBI said that delisting of start ups should be considered successful if the post offer acquirer or promoter shareholding, taken together with the shares tendered and accepted, reaches 75% of the total issued shares of that class; and at least 50% shares of the public shareholders are tendered and accepted. Further, for delisting, SEBI said the Reverse Book Building mechanism will not be applicable, and for computation of offer price, the floor price will be determined in terms of Takeover Regulations, along with delisting premium as justified by the acquirer/promoter. Also, it has decided to relax the framework for companies seeking to migrate to the main board.
Industry experts said that Sebi’s move, which is also aimed at encouraging successful Indian startups to list in the domestic markets instead of foreign bourses, which many well known domestic startups are exploring currently. Several India’s largest startups such as Walmart-owned Flipkart are actively looking for a $10 billion IPO in the US market Mint reported in December last year. Many other well known startups such as Zomato, Swiggy, Delhivery, Policybazaar, Freshworks and Nykaa are also said to be eyeing public listing overseas.
Typically, even while growing their revenues faster than conventional companies startups are unable to make profits in the initial years of inception. And since profitability is a key criteria for companies to get listed on the main board of stock exchanges Sebi had created an alternate listing platform called innovators growth platform (IGP) for new-age tech savvy entrepreneurial ventures in 2019, however the platform has remained inactive so far, which may now change with latest amendments made by Sebi industry experts said.
In the recent months several domestic companies have explored listing in the US and Singapore markets due to their friendlier listing norms and multiple listing routes available. For instance, renewable energy firm ReNew Power Ltd is mulling a listing through the fast-emerging SPAC (special purpose acquisition company) route rather than the conventional IPO route. Under a SPAC route, the company wishing to get listed, typically first gets acquired and merged with a listed company that has been created for the sole purpose of enabling other companies to get listed in lieu of up to 20% stake held by the SPAC entity. The listing information is not disclosed to the public and the formalities are also much lesser than that required in conventional IPOs.
(with PTI inputs)
Click here to read the Mint ePaperMint is now on Telegram. Join Mint channel in your Telegram and stay updated with the latest business news.