India proposes small — firm IPO overhaul, expands role for institutional investors

Oct 14 (Reuters) — India's markets regulator on Wednesday proposed tightening profitability requirements for smaller companies seeking to go public, while allowing those that fall short of the threshold to list if they secure strong institutional participation, as part of a broader overhaul of rules governing their IPOs. A Securities and Exchange Board of India (SEBI) working group also proposed to give qualified institutional buyers (QIBs) greater flexibility to sell their holdings through IPOs, while revising listing eligibility in small- and medium-sized enterprise (SME) IPOs. Here are the key proposals: Introduce market capitalisation-based listing criteria, requiring companies valued at up to 10 billion rupees ($105.10 million) after the issue to list on the SME platform; allow those valued between 10 billion and 40 billion rupees to choose between the SME and main boards. Those valued above 40 billion rupees can list on the main board. Raise the minimum profitability requirement for SME IPOs to an annual average operating profit of 30 million rupees over the previous three financial years, from at least 10 million rupees in two of the past three years. Allow companies that fa