Capital market regulator SEBI has extended the validity of its approvals to IPO bound companies by six months in view of the impact of the Coronavirus (COVID-19) pandemic. In a circular, the regulator said the IPO relaxation is applicable to companies where the approvals have expired or will expire between 1 March and 30 September 2020. The extension is valid from the date of expiry of such observation and subject to an undertaking from lead manager of the issue confirming compliance with applicable regulations.
SEBI took the step following representations from various industry bodies. The circular added that the new guidelines are applicable with immediate effect.
Listing guidelines mandate that any increase or decrease in fresh issue size by more than 20% needs to be accompanied with fresh draft offer document along with fees. However, SEBI has now increased this limit to 50% for all IPOs, rights issues, and FPOs opening before 31 December 2020. This IPO relaxation comes with the rider that there should not be any change in the objects of the issue.
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While SEBI’s new guidelines offer relief to the companies currently in the IPO pipeline with necessary approvals, it will specifically help Coldex, T&T Infra, and Shriram Properties whose IPO approvals have lapsed since 1 March.
IPO relaxation good, sentiment bad
It remains to be seen if IPO hopefuls and their lead managers bite the bullet amid the volatile and gloomy market conditions. The month-long nationwide lockdown to contain the impact of Coronavirus pandemic has resulted in economic activity coming to a grinding halt.
Last month, Antony Waste Handling Cell – a municipal solid waste (MSW) player – had to withdraw its INR206 crore IPO after an extension of share sale failed to get required subscription. Meanwhile, performance of recently listed companies hasn’t been great. The hugely-subscribed IPO of SBI Cards had a discounted listing and shares have sunk further amid a sharp crash in the secondary market.
