Quick takes, analyses and macro-level views on all contemporary economic, financial and political events.
Capital markets regulator Sebi has made far-reaching changes to listing norms on the Innovators Growth Platform (IGP), the novel exchange podium for startups. It has considerably eased the eligibility and listing criteria, which seems most welcome.
The idea is to boost public listing from India’s thriving startup ecosystem. At present, for a company with early-stage investors to be able to list on IGP, the shareholding period for investors owning 25% in the startup needs to be at least two years. Sebi has now halved the timeline to just one year.
It has also decided on a higher share of allotment, of up to 60% of issue size, to anchor investors on a discretionary basis, prior to the issue’s opening, with a 30-day lock-in for such shares. Further, startups now have Sebi’s go-ahead to issue superior voting rights to promoters or founders, and such companies can now list and go public under the IGP framework.
Besides, the open offer trigger for companies to be listed on IGP has been raised from 26% to 49%. Also, Sebi has eased the rules for delisting on IGP or to migrate and move to the main board, NSE or BSE. Note that IGP, floated in 2019, with the specific purpose of providing innovation-intensive startups listing opportunities under much-relaxed norms compared to the mainboard capital markets, is yet to have a listing.
Large investors in startups, so-called ‘accredited investors’, individual investors with a net worth of `5 crore, and now to be labelled ‘IGP investors’, can now have larger pre-issue shareholding of up to 25% in the company, up from a ceiling of 10% earlier. The revamped norms could see IGP take off. We do need to update and revise rules and benchmark the norms to global standards to unlock shareholder value here.
This piece appeared as an editorial opinion in the print edition of The Economic Times.