SEBI's Relaxed Public Shareholding Norms: Limited Impact on IPO Market, Expert Says
Pranav Haldea of Prime Database Group suggests SEBI's proposed easing of minimum public shareholding norms will have minimal effect on India's IPO market. Only about 10 companies, including potential large IPOs like Jio and NSE, would qualify under the new rules. Haldea notes that primary and secondary markets can operate simultaneously, citing post-Covid data as evidence. He emphasizes the importance of realistic IPO pricing, observing that some companies prefer to let SEBI approvals lapse rather than launch below expected valuations. The success of future IPOs, especially in the tech sector, will depend on pricing strategies and market conditions.
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The Securities and Exchange Board of India (SEBI) has recently proposed easing minimum public shareholding norms, but according to Pranav Haldea of Prime Database Group, this move is expected to have a limited impact on India's Initial Public Offering (IPO) market.
Limited Beneficiaries
Haldea points out that under the proposed relaxed rules, only about 10 companies in the current market would qualify. Among the potential beneficiaries are a few large IPOs, including Jio and the National Stock Exchange (NSE).
Primary and Secondary Markets
Addressing concerns about the impact on the broader market, Haldea noted that primary and secondary markets can operate in parallel. He cited post-Covid data as evidence, highlighting that record primary market issuances occurred alongside rallies in the secondary market.
Tech IPO Valuations
When questioned about the valuations of tech IPOs over the next 12-18 months, Haldea provided insights into market dynamics:
- Full subscription of IPOs indicates sufficient demand at given price points.
- Post-listing performance depends on fundamentals and market conditions.
- Issuers must price IPOs realistically to ensure demand.
Pricing Strategies
Haldea emphasized the importance of realistic pricing for IPOs. He observed that some companies have chosen to let their SEBI approvals lapse rather than launch their offerings below expected valuations.
Conclusion
While SEBI's proposed relaxation of public shareholding norms represents a significant regulatory shift, its immediate impact on the IPO market appears to be limited. The success of future IPOs, particularly in the tech sector, will continue to depend on careful pricing strategies and market conditions.
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