SEBI Extends Relaxation on IPO Fresh Issue Size Changes Until March 2027

The Securities and Exchange Board of India (SEBI) has extended a relaxation that allows companies to increase or reduce the fresh issue component of their initial public offerings (IPOs) by up to 50% without filing fresh draft offer documents. The extension applies to IPOs opening on or before March 31, 2027, according to the Association of Investment Bankers of India (AIBI).

The earlier relaxation was valid until September 30, 2026. The extension follows requests from AIBI, which highlighted practical difficulties faced by companies and merchant bankers when revising the size of the fresh issue during the IPO process.

Mahavir Lunawat, Founder of Pantomath Financial Services Group and Chairman of AIBI, said that IPO sizes may need to be revised as business requirements and market conditions change. He added that the relaxation would reduce procedural hurdles and make the IPO process more efficient, while retaining the requirements for transparency, due diligence and investor protection.

What Has Changed?
Under the regular regulatory framework, a change of more than 20% in the estimated fresh issue size requires companies to file fresh draft offer documents. Under the extended relaxation, companies can increase or reduce the fresh issue component by up to 50%, subject to prescribed conditions, without making a fresh draft filing.
For example, if a company initially plans to raise Rs 1,000 crore through a fresh issue, the relaxation could allow it to revise the amount to Rs 500 crore or Rs 1,500 crore without filing fresh draft offer documents, provided the applicable conditions are met.

However, this flexibility comes with certain requirements. The main objectives of the issue must remain unchanged, and the company must provide adequate justification for the revision. Lead managers are also required to conduct due diligence, update the relevant sections of the draft red herring prospectus (DRHP) and make an addendum publicly available to inform investors about the changes.

What Does This Mean for Retail Investors?
The extension gives companies greater flexibility to adjust their fundraising plans in response to changing business needs and market conditions. It may also help reduce procedural delays when revisions to the fresh issue size become necessary.

However, the relaxation does not mean that companies can change their fundraising plans without disclosure. The prescribed conditions and disclosure requirements continue to apply.
For retail investors, the key takeaway is to check the latest offer documents and any addendum issued by the company before making an investment decision. A change in the fresh issue size can affect the amount of capital a company raises from the market. Investors should therefore review the revised issue details and the stated use of proceeds before deciding whether to subscribe to an IPO.