The discussion highlighted key developments and realities around the IPO process in India. Hosted by Naresh Bulchandani, Head - Products and Investment Strategy at Merisis and featuring Devesh Desai, IPO Mentor and Preparation Guide, the webinar addressed some common myths around IPOs.
Addressing the common myth that IPOs are cumbersome and expensive, it was emphasized that the process largely depends on a company’s preparedness. Going public requires mental and operational readiness for public scrutiny, enhanced disclosures, and ongoing compliance. While the IPO process itself can be managed efficiently if a company is well-prepared, the real challenge lies in sustaining compliance post-listing through quarterly reporting and continuous disclosures—much like maintaining a quality certification over time.
From a cost perspective, IPO expenses typically range between 5–10% of the issue size, with larger issues benefiting from lower relative costs. Importantly, selling shareholders must bear their proportionate share of these expenses, as per regulation.
The session also outlined the regulatory framework governing listed companies. Prior to listing, companies are governed mainly by the Companies Act. Once the IPO process begins, SEBI regulations come into play—most notably the ICDR Regulations, which govern disclosures and issue norms, and the LODR Regulations, which define ongoing governance and disclosure obligations post-listing. Stock exchanges act as the primary frontline regulators for listed entities, ensuring timely and transparent dissemination of information to the market.
Additional regulations cover areas such as ESOPs, M&A, demergers, and minimum public shareholding, alongside continued applicability of the Companies Act, Income Tax Act, and the Securities Contracts Regulation Act. The discussion also covered lock-in requirements for promoters and pre-IPO shareholders, and the extinguishing of special rights held by private investors at the time of listing.
Overall, while the IPO journey involves extensive regulation and discipline, once systems are in place, compliance becomes manageable—and the benefits of listing can outweigh the effort when done for the right reasons.