SEBI’s IPO Relaxation Spree Continues with Another Major Relief on Issue Size Resizing

Earlier relaxations supported massive capital formation amounting approximately to ₹1 lakh crore in the last quarter, making a record

Mumbai: The Association of Investment Bankers of India (AIBI), the apex industry body representing investment bankers in India, has welcomed the Securities and Exchange Board of India’s (SEBI) decision to extend the relaxation allowing issuer companies to increase or decrease the size of their fresh issues up to 50% without filing a fresh Draft Red Herring Prospectus (DRHP), subject to the prescribed compliance requirements.

The relaxation will apply to IPOs opening on or before March 31, 2027. Earlier, the relaxation was allowed for DRHPs filed until September 30, 2026. SEBI has issued several relaxations and has undertaken several measures towards ease of capital formation as well as protecting investor interest. This relaxation has facilitated a higher number of IPO launches, contributing to nearly ₹1 lakh crore in capital formation during the last quarter.

The decision follows representations made by AIBI to SEBI highlighting the practical challenges faced by issuers and merchant bankers when revising the size of fresh issues during the IPO process. The relaxation is expected to provide greater flexibility in responding to evolving business requirements and market conditions, while reducing procedural hurdles and improving operational efficiency in the capital-raising process.

Under the revised framework, the lead manager may file an updated offer document reflecting the revised issue size, provided there is no change in the main object of the issue, the lead manager undertakes compliance with the SEBI Regulations, and all relevant sections of the DRHP are appropriately updated, with an addendum made public. Lead managers will also be responsible for conducting adequate due diligence and ensuring that the revision is appropriately justified.

Commenting on the development, Mr. Mahavir Lunawat, Chairman, AIBI, said, “IPO sizes may need revision with evolving business needs and market conditions. This SEBI’s relaxation reduces procedural hurdles and makes the IPO process more efficient. AIBI welcomes SEBI’s move to provide greater flexibility to issuers and merchant bankers. This is a balanced step that facilitates capital raising while safeguarding transparency, due diligence and investor protection.”

AIBI remains committed to working closely with SEBI and other stakeholders to identify operational challenges, provide industry feedback and support the continued evolution of a robust, efficient and globally competitive primary market ecosystem.