SEBI Allows Companies To Cut Or Raise IPO Size By Up To 50% Amid Middle East Tensions

The Securities and Exchange Board of India (SEBI) will now let companies revise the size of their initial public offerings (IPOs) by up to 50%. This can be done without filing fresh documents.

Under existing norms, any change of 20% or more in a planned fundraise required companies to refile their draft red herring prospectus (DRHP), a time-consuming and costly process. That threshold has now been raised significantly, giving issuers much greater flexibility.

Why Did The SEBI Act Now?

The regulator said the ongoing geopolitical tensions in the Middle East had made it difficult for companies to plan and execute public market fundraises.

Investor participation has been uneven, and issuers have struggled to understand demand under current conditions.

The rule change is a response to representations made by the industry highlighting these challenges.

How The New Process Works?

Companies will only need to submit their revised offer size to SEBI for approval. These reviews will be fast-tracked. If a company decides to change its IPO size, it must publicly announce that change in writing, so investors can see what has been revised before putting in their money.

Lead managers are required to certify that all offer documents remain compliant with regulatory provisions. However, the relief is not a blanket. It applies only to IPOs opening on or before 30 September 2026.

The objective of the issue must remain unchanged and companies cannot alter what they intend to do with the proceeds. Approvals will be granted on a case-by-case basis.

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Part Of A Broader Relief Package

This is not SEBI's first move in response to current market conditions. Last week, the regulator extended IPO validity deadlines for companies whose approvals were set to lapse between 1 April and 30 September. It also relaxed the requirement for 25% public shareholding during the same window.

As of 2 April, SEBI had approved 143 companies to collectively raise ₹1.745 lakh crore through IPOs.

Sources:

Reuters

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