Will IPOs get simpler and approvals faster? SEBI chief Pandey explains what’s changing

The Securities and Exchange Board of India (SEBI) is focusing on faster regulatory processes, simpler disclosures and optimal regulation to improve ease of doing business in the capital markets, SEBI chief Tuhin Kanta Pandey said at an AIBI event.

Speaking on foreign portfolio investors (FPIs), Pandey said FPIs are always on the lookout for good opportunities. He said India’s economy requires capital in all forms, and continued inflows remain important for market growth.

Simpler IPO disclosures

Add Zee Business as a Preferred Source

On the IPO process, Pandey said companies will now be required to include a short and easy summary along with the draft offer document. This abridged prospectus will help investors understand key aspects of an IPO without going through lengthy and complex documents.

He said SEBI has developed a strong internal sense of urgency to clear documents at the earliest. According to him, a 30-day turnaround time in regulatory processes is critical to improving efficiency and predictability.

Pandey said SEBI is also focusing on faster disposal of offer documents to reduce delays and improve regulatory efficiency.

Sharper disclosures, review of LODR norms

Referring to IPO-related checks, Pandey said SEBI’s examination has shown that due diligence during IPO processes has not always been impartial. This has prompted the regulator to sharpen its focus on disclosures.

On valuation, Pandey clarified that SEBI does not conduct any prior review of IPO valuations. He said the emphasis is on stronger disclosures so that investors are well informed and can make decisions based on adequate information.

Pandey said SEBI follows the principle of optimum regulation. The regulator aims to avoid micro-regulation while ensuring adequate supervision and improving ease of doing business.

He said SEBI is undertaking a comprehensive review of the Listing Obligations and Disclosure Requirements (LODR) regulations to remove repetitive or unnecessarily complex provisions, while retaining essential disclosures and investor safeguards.

Corporate bonds, SME IPO oversight

On corporate bonds, Pandey said SEBI will soon launch a nationwide awareness programme to improve understanding of corporate bond investments across the country.

On SME IPOs, he said scrutiny around fund utilisation has been tightened. Following certain cases, SEBI has adopted a stricter approach to ensure funds raised are used for stated purposes. He added that flexibility will be maintained, but monitoring and oversight will continue.

Also Read: Mutual Funds: 15-year vs 3-year SIP — Which offers a higher probability of returns? Anil Singhvi explains

OFS trends and SME market readiness

Commenting on offer for sale (OFS) trends, Pandey said the share of OFS in IPOs has declined over the past two years. He said OFS is a natural part of the IPO process and helps in capital recycling, which strengthens the overall market ecosystem. The choice between OFS and fresh issue is market-driven, he added.

On the SME segment, Pandey said India has a large SME universe, but only a limited number of companies are currently market-ready. Out of nearly six lakh SMEs, only about 2,000 to 5,000 companies are immediately suitable for raising capital through the markets.

SEBI also flagged concerns around the pre-listing grey market, saying there can be a difference between grey market prices and post-listing share prices, which may lead to losses for investors. It said this remains a grey area and the regulator is working on it.

SEBI said it has identified a significant gap in investor education and is addressing it through a multilingual, multimedia and multi-agency approach, as working in just two or three languages is not sufficient.

The regulator said around 70 per cent of new investors are below the age of 30, making it necessary to change communication styles. It added that IPOs should not be viewed only from a listing gains perspective.

SEBI said it has accepted the NSE settlement. It added that private companies fall under the Ministry of Corporate Affairs, and SEBI is working with the ministry on a pre-IPO platform. SEBI said a government notification on a minimum 2.5 per cent dilution is expected soon.