The Securities and Exchange Board of India (SEBI) has recommended to the Centre to relax minimum public shareholding (MPS) norms for large companies coming up with big IPOs.
These scale-based thresholds for large initial public offerings (IPOs) are aimed at facilitating good quality stocks to get listed in the primary market so that retail investors could invest in good quality stocks.
As per existing regulations, issuers with a post issue market capital (market cap) above ₹1,00,000 crore are required to offer to public ₹5,000 crore and at least 5% of the post issue market cap.
“For large issuers, diluting substantial stake through an IPO can pose challenges, as the market may not be able to absorb such a large supply of shares, which in turn may discourage such issuers from pursuing listing in India,” SEBI chairman Tuhin Kanta Pandey said, addressing a post board meet press conference.
“Regular dilution post listing impacts issuers until MPS requirements are complied with, may lead to price overhang due to the impending equity dilution, thereby adversely affecting the interest of existing public shareholders,” he said.
“Further, under the proposed MPO requirements, issuers are recommended to be permitted to list with a lower initial public float, hence, an extended period is required to allow them to achieve MPS of 25% in a gradual manner. Extended period for large issues also do not pose risk of low liquidity in large size IPO,” he added.
For large size companies, the revised Minimum Public Offer will still be large enough to provide sufficient stock to the market, including retail investors, and facilitate liquidity, the SEBI chief said.
Post listing, the stock exchanges will continue to monitor these issuers through their surveillance mechanism and related measures to ensure orderly functioning of trading in shares of such issuers.
For companies with market cap of ₹50,000 crore to ₹1,00,000 crore, SEBI has recommend a minimum public offer of ₹1,000 crore and at least 8% of the post issue market cap. An MPC of 25% is to be achieved within 5 years from date of listing.
For companies with a market cap between ₹1,00,000 crore and ₹5,00,000 crore, a minimum public offer of ₹6,250 crore has been recommended with atleast 2.75% of the post issue market cap.
In case public shareholding is less than 15% as on the day of listing, an MPS of 15% is to be achieved within five years and 25% within 10 years from the date of listing.
In case public shareholding is 15%, an MPS of 25% to be achieved within five years of listing.
And for companies with market cap of above ₹5,00,000 crore there would be a minimum public offer of ₹15,000 crore and atleast 1% of the post issue market cap subject to minimum dilution of 2.5%.
In case of public shareholding is 15% or above on the date of listing, MPS of 25% to be achieved within five years from date of listing.
To a query from The Hindu, Mr. Pandey said, “Primarily market activity is extremely important for capital formation and we want good companies to get listed.”
According to SEBI top officials, such measures would prompt many good large companies to get listed.
Some of the large companies that are waiting to come out with IPOs are Reliance Jio and LG.
To enhance ease of doing business for foreign portfolio investors (FPIs), SEBI also announced a proposal to introduce a single automatic window for foreign investors.
The board also approved a proposal to allow retail schemes in IFSCs with a resident Indian sponsor or manager to register as FPIs.
Answering a question, the SEBI chief said NSE IPO should be coming soon.
“I think the NSE IPO should be coming soon. Of course that is once they have fully resolved the pending settlements,” he said.
“The exchange has made a lot of progress on outstanding issues. This will be speeded up further since now the exchange has a chairman in place.”
SEBI said around 100 new FPIs are seeking registration every month. There are over registered 12,000 FPIs in the country now, up from 10,000 a year ago.
Published – September 12, 2025 10:13 pm IST
