Markets regulator SEBI has approved a slew of proposals, including relaxing minimum public offer requirements and amending norms for portfolio managers.
The government is betting on reducing its stake in state-run LIC through an IPO in the next fiscal year in an attempt to raise enough non-tax revenues to narrow the country’s fiscal deficit.
“For issuers with post-issue market capital exceeding Rs 1 trillion, the requirement of the minimum public float will be reduced from 10 per cent of post-issue market capital (existing provision) to Rs 10,000 crore, plus 5 per cent of the incremental amount beyond Rs 1 trillion. These issuers shall be required to achieve at least 10 per cent public shareholding in two years and at least 25 per cent public shareholding within five years from the date of listing,” SEBI said in a release.
Under the formula, a company with a post-issue market cap of Rs 2 trillion will have to divest a minimum of 7.5 per cent, instead of 10 per cent.
At present, companies with a post-issue market capital of ₹4,000 crore or more are required to offer at least 10% of the capital to the public in the IPO. Further, such issuers are also required to achieve a minimum public shareholding (MPS) of at least 25% within three years from the date of listing.
This amendment too will particularly help LIC since its size is so large that the market may find it tough to absorb equity papers worth even 5% of LIC in the further public issues that the insurer will need to launch to comply with SEBI’s public shareholding norms post its IPO.
LIC, which is preparing for its IPO and is currently undergoing an evaluation process by actuarial firms, will be the biggest beneficiary of this relaxation by SEBI.
Besides, the regulator cleared repealing of SEBI (Underwriters) Regulations, 1993 and amendments to the SEBI (Merchant Bankers) Regulations, 1992 and the SEBI (Stock Brokers) Regulations, 1992.
Continuing efforts to further the ease of doing business in the country, the watchdog’s board also gave its nod for merger of SEBI (Regulatory Fee on Stock Exchanges) Regulations, 2006 with Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018, according to a release.