The market regulator allowed the confidential presentation or the OPI mechanism in December 2022 | Photo credit: Lakshmiprasad S
Physicswalh, an online education platform, has chosen a confidential approach prior to the presumption for its initial public offer. It is said that Tata Capital, the Tata Group Financial Services Division, is preparing to present a draft of the Red Arenque Prospect for the IPO to a confidential route. Previously, companies such as Tata Play, Vishal Mega Mart and Swiggy have used this file method. Let’s take a close look closely in this mode or presentation.
What is a confidential presentation?
The confidential IPO is an optional route to request a confidential IPO. The market regulator allowed this mechanism in December 2022. According to this route, a company presents a draft document, but it is not made public until the company decides to go live with its offer. The pre-relation to the confidential IPO documents allows the company to interact with the regulator and address any regulatory conerns before the information is made public. These presentations are allowed in markets such as the United Kingdom and the United States.
Does it make sense to opt for the confidential presentation now?
Market observers believe that this can be a good time to opt for such presentations given the greatest volatility of the market in recent times in the middle of the global fee war and uncertainty about OPI launches. The last weeks have not seen a single company take advantage of the IPO market, hinting at a slowdown. Several emitters may also have to rework and re -file supply documents for their opi given the fall in the assessment of their classmates.
What are the advantages of a confidential file?
The confidential fairy can work well for the companies of the new era where investor feedback is important to decide on valuations. It is possible that these companies are not because they reveal their finances and business model too soon for the public. These presentations could be especially useful to protect confidential information related to specific acquisitions and public litigation until there is visibility with respect to the launch of the OPI.
This route is also useful for traditional companies, if the OPI is delayed due to litigation or other commercial consultations. Confidential information in the OPI can be kept away from the public to the real public offer.
Once you get the initial Observations of Sebi, you can expect a much longer period until it is ready to reach the market, which is very useful in a volatile market. In the regular presentation, the approval remains valid for 12 months after Sebi gives you final observations. In the confidential presentation, this is valid for 18 months from the date of Sebi’s observations on the prospect of the confidential draft.
What are the disadvantages?
This route requires a little more time, so most traditional companies would be happy to go with the regular presentation. The confidential presentation adds approximately 45 days to the OPI process. After the prospect of the public draft is presented, the company has to wait 21 days for public comments and then refilae the sacrifice with Sebi. This could mean that the company may have to go through an additional audit, since finances are only valid for a certain period of time. This can lead to additional time and cost, especially for smaller companies.
What are some of the other characteristics?
Companies have to make a public announcement in three newspapers within two days after the filling prior to providing details related to the problem. The regulator will recommend changes or issue observations within thirty days after the previous filling or the response on the requested clarification of managers/regulators/main agencies or the completion of interaction with QIB or the date of intimidation to the regulator on life.
Posted on April 16, 2025