Sebi issues consultation paper for companies looking to raise funds through IPOs

In its discussion paper, Sebi has proposed a combined limit of up to 35% of the fresh issue size for funding inorganic growth initiatives and general corporate purposes.

The Sebi issued a consultation paper on Tuesday, seeking public comments on matters like utilisation of proceeds from fresh equity issued by companies and conditions for offer-for-sale (OFS) for significant shareholders, mainly in new-age technology companies.

In its discussion paper, Sebi has proposed a combined limit of up to 35% of the fresh issue size for funding inorganic growth initiatives and general corporate purposes. “Raising funds for unidentified acquisition leads to some amount of uncertainty/ambiguity in the IPO objects,” the regulator said in the paper.

Furthermore, it has also proposed that of companies wherein there are no identifiable promoters, significant shareholders (more than 20% shareholding) should be allowed to offload only 50% of their shareholding via OFS. The regulator has also sought public views on whether a post-issue lock-in period of six months can be fixed for the same. For anchor investors, currently, the lock-in period is 30 days after the company hits the bourses. However, a longer lock-in period will provide more confidence to other investors in the offer, Sebi said in the paper.