In view of comeptition with many overseas venture capitalists pouring in funds in IT-related startups, the Securities and Exchange Board of India on Tuesday decided to relax the norms of Initial Public Offer (IPO).
The new fast-track route can be tapped by companies with public shareholding worth as low as Rs 250 crore and the board said it plans to set up an Institutional Trading Platform for listing the companies within six days from the IPO date, besides doing away with the need to issue cheques.
Under the new IPO rules, a company with public shareholding worth Rs 1,000 crore can raise funds through FPOs under fast-track mode, which earlier was restrained to Rs 3,000 crore. The new six-day period will come into effect from 1 January 2016, said Sebi chairman UK Sinha.
As many as 3,100 startups in India have raised $7.2 billion in venture capital abroad or in private equity since 2013, according to Thomson Reuters.
“Now all applications can be be ASBA supported and investors would not suffer any loss of interest, while refund of money would not be a problem. In order to help the intermediaries and the system prepare for it, it will be applicable from January 1, 2016. Any IPO ready for subscription as on that date would be through the new mechanism,” Sinha said.
Welcoming the move, e-commerce major Snapdeal said it will benefit “India-focused companies” like it to implement e-IPO and start-up specific listings platform.
“For us at Snapdeal, we are particularly pleased with this move considering that easing of listings norms will benefit India-focussed companies like ours in the long-run,” a company spokesperson said. Snapdeal was among those looking for a US listing and its co-founder and CEO Kunal Bahl had been reportedly in talks since 2013 in that direction.