Extension of facility to amend IPO size removes procedural hurdles: AIBI
The SEBI decision follows representations from AIBI highlighting practical difficulties faced by companies and merchant bankers in revising fresh issue sizes during the IPO process
The Association of Investment Bankers of India (AIBI) anticipates that the extension of regulations permitting companies to adjust the fresh issue component of IPOs by up to 50% without submitting a new draft offer document will streamline the IPO process and alleviate procedural burdens. Sebi's decision to grant this relaxation supports the recommendations of AIBI, which had previously highlighted the challenges faced by companies and merchant bankers in adjusting IPO sizes during the IPO process.
This measure comes into effect following the expiration of the previous window on September 30, 2023.
Mahanir Lunawat, Chairman of AIBI and founder of Pantomath Financial Services Group, emphasized that evolving business needs and market conditions often necessitate modifications to IPO sizes. The new regulation aims to provide issuers and merchant bankers with enhanced flexibility while maintaining essential transparency, due diligence, and investor protection standards.
Under the current framework, changes exceeding 20% in the estimated fresh issue size require a fresh draft filing. The extension allows for revisions up to 50% of the fresh issue component, provided they are adequately justified and meet prescribed conditions.
The revised IPO framework mandates that the primary objectives of the issue remain unchanged, and the revision must be thoroughly documented in the necessary sections of the draft red herring prospectus, followed by a publicly available addendum to inform investors of the alterations. The relaxation specifically pertains to the fresh issue component, which is utilized by companies to raise capital for their own purposes, and does not extend to the offer-for-sale component, where existing shareholders sell their shares.
SEBI introduced this flexibility in April 2026 to address market uncertainties stemming from the West Asia conflict. AIBI reported that this measure has facilitated the successful launch of 69 mainboard IPOs, raising a total of ₹90,482 crore during the July-September quarter, and 92 small and medium enterprise IPOs, which mobilized ₹4,167 crore, contributing to a total fundraising of ₹94,649 crore.
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