Mumbai: India’s stock market regulator SEBI (Securities and Exchange Board of India) has made it easier for big companies to launch their IPOs (Initial Public Offerings). SEBI has changed the rules so that companies don’t need to sell as many shares to the public as before.
Good News for Reliance Jio
According to global brokerage firm Citibank, this new rule will help Reliance Jio a lot.
Jio’s value is estimated at USD 120 billion. Earlier, Jio had to sell 5 percent shares in the IPO, which meant raising around USD 6 billion — a very big amount for Indian markets.
Now, with the new rule, Jio only needs to sell 2.5 percent shares, raising about USD 3 billion, which is much easier and more realistic.
How the Rules Have Changed
If a company’s post-IPO market value is over Rs 50,000 crore, it must now sell only 8 percent shares to the public (earlier it was 10 percent).
If the company’s value is over Rs 5 lakh crore, the minimum public offer is now just 2.5 percent (earlier it was 5 percent).
NSE Also to Benefit
These changes will also help the National Stock Exchange (NSE). NSE is planning to launch its IPO next year with a value of over USD 50 billion.
SEBI’s relaxed rules will reduce the pressure on NSE to sell a large portion of shares.
SEBI Plans a Regulated Pre-IPO Platform
SEBI is also planning to create a new platform where shares can be traded in a legal and safe way before the IPO is officially listed.
This will help replace the unregulated “grey market” where many people trade IPO shares without rules.
This platform will also give investors more information before they invest, making the system more transparent.
