Startup IPOs for rich

Mumbai: Institutional investors and high net-worth individuals (HNIs) only will be allowed to invest in the initial public offering (IPO) launched by new age companies like startups and Internet firms.

In a discussion paper on an ‘alternative capital raising platform’ for new age companies floated on Monday, Sebi said that the minimum investment size in such IPOs should be Rs 10 lakh. The regulator has decided to carve out a separate set of regulations for such new age companies and has recommended major relaxations in the IPO guidelines, which will make it easier for these companies to raise capital from the domestic market and get listed on the domestic bourses.

Sebi also proposed that the issue of shares to qualified institutional buyers should be on discretionary basis whereas the allotment of shares to HNIs should be on proportionate basis.

On the disclosure requirements, Sebi said that the companies coming out with IPOs have to just state the broad objects instead of stating the purpose of the issue, means of financing such projects and deployment status of the proceeds at each stage of the project. It also brought down the minimum lock-in period of promoters from 3 years to six months.