Sebi relief for IPO-bound PE investors

Mumbai: In a relief for PE investors, Sebi on Monday relaxed rules on their special rights in IPO-bound companies. The regulator said all special rights granted to shareholders through any arrangement would lapse on the date of listing.

It had earlier in an advisory to merchant bankers said that private equity investors would have to cancel their special rights when the investee company files its updated IPO document with Sebi. Securities lawyers had said the requirement would expose PE investors to risks if IPOs of their investee companies fail to materialise.

"Sebi has now allowed special rights till listing, as opposed to filing UDRHP (updated draft red herring prospectus). This reversal of position will benefit investors since they'll have their special rights right up till listing," said IndusLaw partner Manshoor Nazki.