SEBI Proposes Eased IPO Rules, Potentially Benefiting Reliance Jio and NSE
SEBI has proposed changes to listing rules for large companies, potentially facilitating mega IPOs like Reliance Jio and NSE. Companies valued above Rs 50,000 crore would need to float 8% equity instead of 10%, with extended timelines for reaching 25% public float. For companies valued above Rs 1 lakh crore, mandatory offer requirements are reduced to 2.75%, while those above Rs 5 lakh crore need only 2.5%. This could significantly benefit Reliance Jio, valued at over $120 billion, reducing its required float from 5% to 2.5%. The NSE, targeting a $50 billion valuation, could also benefit. Other potential beneficiaries include PhonePe and Flipkart. Recent large IPOs in India include Hyundai Motors (Rs 27,000 crore), Swiggy (Rs 11,300 crore), and NTPC Green (Rs 10,000 crore).
*this image is generated using AI for illustrative purposes only.
The Securities and Exchange Board of India (SEBI) has put forward a proposal to relax the listing rules for large companies, a move that could pave the way for mega Initial Public Offerings (IPOs) including those of Reliance Jio Infocomm and the National Stock Exchange (NSE).
Key Proposed Changes
For Companies Valued Above Rs 50,000 Crore:
- Required to float 8% equity instead of the current 10%
- Extended timeline of five years (up from three) to reach 25% public float
For Companies Valued Above Rs 1 Lakh Crore:
- Mandatory offer requirements reduced to 2.75% from 5%
- Can achieve 15% public float within five years and 25% within ten years
For Companies Valued Above Rs 5 Lakh Crore:
- Mandatory offer requirements further reduced to 2.5%
Potential Beneficiaries
Reliance Jio Infocomm:
- Valued at over $120 billion by Citi
- Under new rules, would need to float only 2.5% (approximately $3 billion)
- Current rules would require a 5% float (approximately $6 billion)
National Stock Exchange (NSE):
- Targeting a market debut at over $50 billion valuation
- Could benefit from reduced float requirements
Other Potential Beneficiaries:
- PhonePe: Preparing a $1.5 billion IPO at $15 billion valuation
- Flipkart: Exploring domestic listing
Recent Large IPOs
The Indian market has seen several significant IPOs recently:
| Company | IPO Size (in Crores) |
|---|---|
| Hyundai Motors | 27,000 |
| Swiggy | 11,300 |
| NTPC Green | 10,000 |
These proposed changes by SEBI aim to facilitate easier public listings for large companies, potentially attracting more mega IPOs to the Indian market. The relaxed rules, if implemented, could significantly reduce the initial public float requirements for companies like Reliance Jio and NSE, making it more feasible for them to go public.
The extended timelines for achieving minimum public shareholding compliance also provide these large entities with more flexibility in managing their public float over time. This move could potentially stimulate the Indian IPO market and attract more large-scale listings in the near future.
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