Jio, NSE IPOs in focus: Why the new graded listing rules could be a game-changer for mega firms

Dalal Street, especially the IPO market is abuzz with anticipation. The Finance Ministry’s Department of Economic Affairs (DEA) recently announced changes to IPO rules. This is something that will make it easier for large companies to go public.

The new rules lower the minimum shareholding that companies must sell to the public in an IPO. This change is particularly important for some of India’s most awaited IPOs. This includes the Reliance Jio and the National Stock Exchange (NSE).

Let’s take a look at the key details of this recent development and what it means for investors –

Listing norms: What has changed?

The biggest change is for India’s largest companies. Firms with a post-listing market value above Rs 5 lakh crore can now offer just 1% of their shares to the public at the time of listing.

Over time, they must increase public ownership to 15% within five years and 25% within ten years. Companies with valuations between Rs 1 – 5 lakh crore can offer as little as 2.75%, while firms valued between Rs 50,000 crore to Rs 1 lakh crore must offer 8% initially.

Smaller companies still have to offer more. Firms with post-listing capital of up to Rs 1,600 crore must sell at least 25% of their shares to the public. Mid-sized companies with capital between Rs 1,600 – 4,000 crore need to offer shares worth at least Rs 400 crore.

Similarly, companies valued between Rs 4,000 – 50,000 crore must put on sale at least 10%, with a promise to raise it to 25% within three years.

Graded listing: Why it matters

This change brings the focus directly on some of India’s most awaited IPOs, including Reliance Jio and the National Stock Exchange (NSE).

These companies could go public while initially offering only a small fraction of their shares, allowing them to raise funds without losing control.

For investors, it means they get a chance to buy into some of India’s biggest and most valuable firms, though the initial allocation might be limited.

The government has also made it clear that non-compliance with these rules could lead to penalties from stock exchanges.

At the same time, the tiered system ensures smaller and mid-sized firms still maintain adequate public participation.

Could this trigger a wave of mega IPOs?

According to industry observers, this in some ways could potentially encourage more large companies to consider listing.

Previously, firms may have held back because they had to offer a larger chunk of their shares. With the new rules, companies can start small and gradually increase public ownership over time.

What investors need to know

For ordinary investors, the immediate focus will be on the upcoming Jio and NSE IPOs. While only a small percentage of shares may be available initially, more stock is expected to come to the market over time.

Overall, the new development will make it easier for India’s biggest companies to go public without giving away too much equity right away.

For the market, it could mean more high-value IPOs, bigger listings, and much more.