Companies Opting for SEBI's Confidential IPO Filing Process at Increased Rate

Confidential IPO Filings Gaining Popularity in India

The number of companies opting for confidential IPO filings has been rising as issuers seek greater flexibility around listing timelines and valuation discussions. Between June 2025 and May 2026, 39 companies filed draft red herring prospectuses through the confidential route, according to market participants.

Bankers have also said that they are increasingly suggesting the mechanism to their clients as it allows companies to deal with regulators while also having the option to delay or abandon their listing plans without any public scrutiny.

The confidential filing route allows companies to submit draft offer documents to the Securities and Exchange Board of India (SEBI) without making them public. The regulatory review can begin as soon as the document is submitted, but issuers also have control over when to disclose information and launch their offering.

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According to Richa Choudhary, Partner – Capital Markets at Trilegal, adoption has steadily increased since the framework was introduced, particularly among startups and new-age technology companies.

The confidential filing mechanism allows companies to submit draft offer documents to SEBI on a confidential basis, enabling regulatory review and making necessary amendments based on queries and comments from regulators, without immediate public disclosure and scrutiny.

One of the key attractions is the longer validity period of SEBI's approval. Unlike the traditional route, where the regulator's approval is valid for one year, companies that file confidentially have up to 18 months to launch their IPO.

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The process also allows issuers to keep sensitive information such as business strategies, financial information, and certain key performance indicators hidden from competitors until they are ready to proceed with the IPO.

Under this mechanism, the firms submit a DRHP confidentially to SEBI and stock exchanges. They only make a brief public announcement about the filing. These companies can also engage in limited discussions with Qualified Institutional Buyers (QIBs) before receiving SEBI's observations.

Once SEBI completes its review and issues a final observation letter, the issuer must file an Updated Draft Red Herring Prospectus (UDRHP-I) for public comments, and then a revised UDRHP-II after incorporating all the feedback that it receives. The company can launch its IPO within 18 months of receiving SEBI's observation letter, given that the first UDRHP filed within 16 months.

Prakash Bulusu, Joint CEO of IIFL Capital, said companies increasingly view confidential filing as a strategic option within the IPO process rather than a replacement for the traditional route.

The framework also enables companies to conduct limited investor outreach before publicly announcing their IPO plans, helping management teams gauge investor appetite and valuation expectations.

However, the key trade-off is that the process can be more expensive and time-consuming. Companies may need to update their financial statements and disclosures if market conditions or business performance change during the review period.

Choudhary said the extended timeline and additional documentation requirements can result in higher legal, compliance, audit, and advisory costs. The exact increase in cost depends on the issuer, the changes based on the feedback received. The route also reduces early visibility among investors and analysts.

Some may continue to prefer the transparency that comes with a public filing. Without a publicly available DRHP or detailed research coverage, certain institutional investors may choose to engage only once more information becomes available. However, this concern is less obvious for established brands and well-known businesses where investors are already familiar with the company's operations.

As India's IPO market matures, bankers and lawyers expect confidential filings to become an increasingly mainstream option for issuers seeking greater control over timing, valuation, and market readiness before going public.