Large firms valued above ₹1 trillion can now launch IPOs with a minimum float of 2.5 per cent of paid-up and 2.75 per cent of post-issue capital, down from 5 per cent

The Securities and Exchange Board of India’s (SEBI) relaxation of public float requirements for mega public offers is expected to change the way India’s largest companies approach listings, easing supply pressures on the market while safeguarding investor inclusivity.

Large firms valued above ₹1 trillion can now launch IPOs with a minimum float of 2.5 per cent of paid-up and 2.75 per cent of post-issue capital, down from 5 per cent. This could benefit conglomerates like Reliance’s Jio Platforms, where a 5 per cent float at its $120 billion valuation would mean $6 billion in shares hitting the market at once.

“SEBI’s relaxation is aimed at making India a more attractive listing destination by easing execution risk, especially for mega-caps where floating even 10 per cent initially could mean tens of billions of dollars in supply that cannot be easily absorbed,” said Hardeep Sachdeva, Senior Partner, AZB & Partners. “By lowering the entry bar, SEBI is encouraging large issuers to tap domestic capital markets without overwhelming liquidity or dampening valuations.”

Longer MPS timelines

For companies valued between ₹50,000 crore and ₹1 trillion, the new minimum public offer will be ₹1,000 crore and at least 8 per cent of post-issue capital, with 25 per cent minimum public shareholding (MPS) to be met in five years. If listing MPS is below 15 per cent, they get five years to reach 15 per cent and ten years for 25 per cent.

“These changes will balance out float requirements and make it easier for large issues like Jio Platforms to go through smoothly,” Yash Ashar, Senior Partner at Cyril Amarchand Mangaldas said. “Giving a longer period of time allows the market to expand and the listed entities to perform during such a period can only be beneficial for true price discovery as compared to excess supply.”

Tushar Kumar, an advocate at the Supreme Court of India said that a rigid insistence upon large upfront dilution could strain market capacity, distort demand-supply equilibrium, and depress valuations. “The revised dispensation mitigates such risks by allowing a more calibrated and staggered offloading of equity into the market,” he said.

However, Archana Balasubramanian, Partner at Agama Law Associates disagreed as most companies now have sufficient investments from outside promoter groups and other investors to increase the public float. “A company that does not require public funding should not be forced to offer to the public another issue of its shares within a few years of listing. Issues such as LIC saw 40 lakh public shareholders being added with minimal divestment.”

Retains retail quota

For investors, the most direct impact is the regulator’s decision to keep the 35 per cent retail quota unchanged. This comes despite an earlier consultation proposing a cut, which could have restricted small investor access to marquee IPOs.

While bankers had raised concerns about recent large IPOs being under-subscribed by retail investors, SEBI plans to rationalise minimum public offer norms rather than curtailing retail participation. Data from recent mega-IPOs such as Life Insurance Corporation of India, and Hyundai Motor India have shown decent retail demand, and any reduction in their quota would have been perceived as disproportionately tilting the balance towards institutional investor, said Tanmay Banthia, Partner at TARAksh Lawyers and Consultants.

This reversal is seen as averting potential institutional dominance in allocations, as it could widen wealth disparities, said experts. Overall, the impact of SEBI’s decision is twofold: it reduces market strain from mega listings while keeping retail participation intact.

Published on August 20, 2025